After the Taper: The Fed’s Non-Plan Is Unchanged

inflation

Source: Mises.org – After the Taper: The Fed’s Non-Plan Is Unchanged

As an economist, it is getting more difficult to understand the logic underlying current monetary policy in the U.S. There are two main channels by which economists think monetary policy can influence growth and employment. The first is to lower interest rates to spur investment and consumption spending. The second is to induce inflation so real wages drop, spurring output and employment.

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Fed Assets Reach Record $4 Trillion on Unprecedented Bond-Buying (Dec 2013)

federal-reserve

Source: Bloomberg – Fed Assets Reach Record $4 Trillion on Unprecedented Bond-Buying

Notable excerpts:

The Federal Reserve’s balance sheet reached a record $4 trillion, as the central bank pushed on with its unprecedented asset-purchase program.

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U.S. Stocks Rise to Records as GDP Growth Tops Estimates (Dec 2013)

Dow_Jones

Source: Bloomberg – U.S. Stocks Rise to Records as GDP Growth Tops Estimates

Notable excerpts:

U.S. stocks rose, with the Standard & Poor’s 500 Index capping its biggest weekly gain since October, as data showing faster-than-estimated growth boosted confidence in the world’s largest economy.

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Fed Seen Tapering QE in $10 Billion Steps in Next Seven Meetings (Dec 2013)

bernanke_01

Source: Bloomberg – Fed Seen Tapering QE in $10 Billion Steps in Next Seven Meetings

Notable excerpts:

The Federal Reserve is likely to reduce its bond purchases in $10 billion increments over the next seven meetings before ending the program in December 2014, economists said.

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BOJ Said to See Significant Room for More Bond Purchases (Dec 2013)

BOJ

Source: Bloomberg – BOJ Said to See Significant Room for More Bond Purchases

Notable excerpts:

Bank of Japan officials see significant scope to boost government bond purchases if needed to achieve their inflation target, according to people familiar with the discussions, signaling little concern with perceptions of underwriting fiscal deficits.

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