Federal Reserve to Committ Treason in September?

Carl Herrera · Aug 31, 2011

http://thinkprogress.org/yglesias/2...-implement-new-stimulus-at-september-meeting/

The minutes of the August Federal Reserve Open Market Committee meeting released yesterday make it clear that the FOMC was closer to recommending more forceful stimulus measures than a simple read of the August statement led me to believe. It’s also been revealed that the FOMC has agreed to hold a special extra-long two-day meeting in September in order to have adequate time to fully discuss the different options for additional stimulus. That seems like a clear sign that Chairman Bernanke favors additional action and wants to make sure that he has time to build consensus on the committee for it rather than letting doubts about specifics cloud the issue.

This seems like a good time to revisit Chicago Fed President Charlie Evans’ proposal to stimulate with extra guidance which I was perhaps a bit too hasty in talking about. Roughly speaking, I think this is exactly the kind of thing the Fed should be doing. His proposal is that the Fed should say that they’ll keep rates super-low and be willing to tolerate inflation of up to 3 percent until unemployment falls below 7 percent. This is basically a back-door NGDP target. For various reasons that I don’t find persuasive, many well-qualified people seem uncomfortable with the idea of the Fed directly promising to create more inflation or more NGDP in part because they think the central bank might fail to hit the target. Consequently, they’re more comfortable with this Evans-style language about willingness to tolerate a higher inflation rate. In my view, these are basically equivalent. The Fed saying it will accept higher inflation unless a supply side miracle suddenly delivers 7 percent unemployment without any increase in the price level is, to me, identical to the Fed targeting a higher inflation rate.
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The patriotic Tea Party folks need to show up for mass demonstration and prayer rally led by Rick Perry!

Dairy Ashford · Sep 1, 2011

Carl Herrera said: ↑

http://thinkprogress.org/yglesias/2...-implement-new-stimulus-at-september-meeting/

The patriotic Tea Party folks need to show up for mass demonstration and prayer rally led by Rick Perry!
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It might not be his "undoing" but anti-Fed rhetoric will be the first thing he retracts or contradicts himself on. Remember McCain and Obama's meet and greet with Hank Paulsen during the '08 election? Fiscal policy is where you get to learn how dumb politicians really are.

Johndoe804 · Sep 2, 2011

Nobody cares about what the most powerful institution in the world is doing.

Northside Storm · Sep 3, 2011

Johndoe804 said: ↑

Nobody cares about what the most powerful institution in the world is doing.
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Yeah, Politburo parties down in Beijing tend to be quite lame.

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