My previous post reviewed the profound changes in the balance sheet of the U.S. Federal Reserve over the last 18 months. Here I comment on some of the concerns that the new Fed balance sheet raises for the conduct of monetary policy.
Category Archives: Federal Reserve
Money creation and the Fed
A lot of people have seen this picture of the recent behavior of the monetary base and wondered what it means.
The first votes are in
The Federal Reserve can’t be entirely pleased with markets’ reaction to its announcement on Wednesday of quantitative goals for purchases of long-term assets.
Quantitative easing
The U.S. Federal Reserve yesterday finally took the step many of us had been urging for some time.
Moral hazard and AIG
We are now suffering the consequences of one of the most spectacular financial miscalculations in history, after investors around the world discovered that trillions of dollars invested in securities derived from U.S. home mortgages were far riskier than they had originally believed.
How much is a trillion?
A trillion dollars used to be a sum that never naturally came up in normal conversation. Now all of a sudden, it’s the standard unit we seem to be using to talk about our economic problems and what we’re trying to do about them. Fortunately, I think I finally got a handle on what $1 trillion really means.
The Bernanke rally
Tuesday’s stock market rally was pretty impressive. But can the mere words of the Federal Reserve Chair actually produce a 4% increase in the value of the U.S. capital stock?
Deflation risk down but not out
While this week brought some pretty frightening numbers on industrial production and manufacturing surveys, I viewed Friday’s CPI release from the Bureau of Labor Statistics as slightly encouraging.
Prospects for the U.S. banking system
Some thoughts on the extent of the problem and options for solution.
The Treasury’s Financial Stability Plan
Here’s my two cents on the latest two trillion.