In an Aug. 17 speech, Federal Reserve Bank of Minneapolis President Narayana Kocherlakota discussed the operation of the Federal Open Market Committee, the key policymaking body of the Federal Reserve system.
In an Aug. 17 commentary, Morgan Stanley economist David Greenlaw reviewed the Federal Reserve’s options given that it has reduced interest rates as low as they can realistically go. He thinks that if the Fed could somehow facilitate refinancing by homeowners at historically low mortgage rates that would free up cash flow that would stimulate spending and growth.
In an Aug. 16 post, University of California-Berkeley economist Brad DeLong noted that the ratio of the money supply to GDP, which economists call velocity, has fallen sharply over the last two years. He says this fact calls into question whether the money supply has any meaningful impact on the economy.
In an Aug. 14 commentary, economist Rajiv Shastri examined the problem of currency holdings in terms of the Fed’s efforts to mobilize excess bank reserves by possibly imposing a penalty rate on them.
In an Aug. 13 speech, Federal Reserve Bank of Kansas City president Thomas Hoenig warned that the Fed must not keep interest rates too low for too long or it will risk creating another boom-and-bust cycle.
An Aug. 11 study from the Federal Reserve found that even though bank reserves have risen by more than $1 trillion over the last two years, there is no reason to think that these funds will necessarily be lent.
Also on Aug. 11, the Bureau of Labor Statistics published a study on use of the Consumer Price Index to adjust tax brackets and other tax purposes.
In an Aug. 9 commentary, PIMCO economist Scott Mather argued that the similarities between the U.S. economy and Japan’s are increasing, with deflation being the overriding problem in both countries. In a related blog post, economist Paul Krugman called attention to a 1999 paper by Federal Reserve Chairman Ben Bernanke on Japanese monetary policy.
In an Aug. 1 study, International Monetary Fund economist André Meier concluded that the risk of inflation is very low when there are large output gaps (high unemployment, low capacity utilization etc.). University of Wisconsin economist Menzie Chinn commented on this study on August 12.
On July 29, Federal Reserve Bank of St. Louis president James Bullard published an article warning that the Fed’s policy of very low nominal short-term interest rates threatens to create Japan-style stagnation. A better policy, he says, would be more aggressive efforts at increasing the quantity of money in circulation.
A July study from the Federal Reserve Bank of New York finds that the acquisition of targeted assets by the central bank when markets are disrupted, especially illiquid assets when the fed funds rate is near the zero bound, are more effective than quantitative easing or conventional interest rate policy.
I previously posted items on this topic on July 29 and June 29.
Bruce Bartlett is an American historian and columnist who focuses on the intersection between politics and economics. He blogs daily and writes a weekly column at The Fiscal Times. Read his most recent column here. Bartlett has written for Forbes Magazine and Creators Syndicate, and his work is informed by many years in government, including as a senior policy analyst in the Reagan White House. He is the author of seven books including the New York Times best-seller, Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (Doubleday, 2006).
