"Easy Money" Article
What do you think the Fed Reserve should do?
Between the division there is a lot of pressure from various policy makers which could influence different members of the Reserve in wrong ways. Considering how egos got into the previous decisions over the recent financial crisis do you think they could play a part here, as well?
What is the importance of the Fed to continue buying bonds?
It is interesting that the article starts out by saying easy money policies will end if the labor market continues to improve. The last week of March was a bad time for the labor market, so we might not be ready to get rid of easy money quite yet. Since the meeting deciding this took place March 19-20, it looks like policy makers spoke too soon.
ReplyDeleteIn general I do not think the FED should stop easy money policy right now. With the recent tax cuts/ fiscal cliff we need any economic stimulus we can get. Easy money policy can fad out only if we have other tools implemented to replace it. For example, I would be in favor of the FED holding off on buying bond if Congress decided to implement expansionary fiscal policy instead. Right now the Fed’s job should be to keep interest rates as low as possible in attempts to foster business growth and engage in quantitative easing in order to clean up the mess made during the financial crisis.