Monetary Policy

Why the Fed Should not Raise Rates.

I wrote this in August 2015. The Federal Reserve has this following mandate: keep unemployment low (under 6%), keep inflation low (under 2%), and keep interest rates moderate. There are only two reasons why the Fed should consider raising rates: 1) low rates and increased money supply will cause inflation without a hike or 2)

The Fed in a Tight Spot of its own Making

  Apart from laws and regulations there are two important parts which the Federal government plays in the economy. One is fiscal policy – taxes and spending. This is in the hands of Congress and the President. The other is monetary policy. This is controlled by the Federal Reserve and consists, apart from times of

What to be Watching.

Wednesday showed that words from the FOMC regarding QE will dominate markets. I think that the worst part of this decrease in the rate of expansion of money supply (tapering) is that it could drag on for a year and create a continuous series of doubts as to when QE would end and extend the