Fed's QE2 bond buying could soon backfire: Plosser
Fed's bond-buying could soon backfire: Plosser
(Reuters) - The U.S. Federal Reserve's aggressive bond-buying plan could soon backfire unless the central bank gradually changes course to head off inflation, said a top Fed official known for his hawkish stance.
Philadelphia Federal Reserve Bank President Charles Plosser said the $600-billion quantitative easing plan, known as QE2, would need to be reconsidered if the U.S. economy's current "moderate recovery" picks up steam.
The prospect of sustained price deflation -- a worry for Fed Chairman Ben Bernanke and other backers of the controversial QE2 plan -- is highly unlikely in part because the Fed's massive reserves will eventually flow out into the economy, Plosser added.
"If the economy begins to grow more quickly and the sustainability of this recovery continues to gain traction, then the purchase program will need to be reconsidered along with other aspects of our very accommodative policy stance," Plosser said in a speech to the Risk Management Association.
"The aggressiveness of our accommodative policy may soon backfire on us if we don't begin to gradually reverse course," he said.
http://www.reuters.com/article/idUSTRE70A31420110111
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Fed's Plosser-unlikely QE2 already boosted economy
Philadelphia Fed President Charles Plosser said the second round of "quantitative easing" purchases, known as QE2, may have had an effect on the financial markets, since they began in November. But it "stretches things," he said, to argue it has affected recent unemployment numbers and data on sales and spending.
http://www.reuters.com/article/idUSNLLBCE7SK20110111
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Fed officials offer dueling views on policy
(Reuters) - Two top Federal Reserve officials offered differing views on monetary policy on Tuesday, with one warning the Fed's ultra-easy stance may soon backfire, and the other saying he is comfortable with it.
Richmond Fed President Jeffrey Lacker, who was unable to give the speech for personal reasons, is one of the central bank's most vocal hawks and says the Fed's additional bond purchases carry inflation risks.
http://www.reuters.com/article/idUSTRE7095YM20110112
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Fed officials' comments on the economy, QE2
The following are some recent comments from Fed policymakers - '*' denotes 2011 voting member of the Federal Open Market Committee, which sets U.S. monetary policy:
* DALLAS FED PRESIDENT RICHARD FISHER, January 12
"Barring some unexpected shock to the economy or financial system, I think we have reached our limit. I would be wary of further expanding our balance sheet."
* MINNEAPOLIS FED PRESIDENT NARAYANA KOCHERLAKOTA, January 11
"There is little or no economic theory to support a connection between monetary policy, as typically conducted in the United States, and bubble formation."
* PHILADELPHIA FED PRESIDENT CHARLES PLOSSER, January 11
"The aggressiveness of our accommodative policy may soon backfire on us if we don't begin to gradually reverse course."
ATLANTA FED PRESIDENT DENNIS LOCKHART, January 10
"The economy seems to have gained durable momentum as we begin 2011 ... While things are looking better, I don't expect a quick fix."
* DALLAS FED PRESIDENT RICHARD FISHER, January 10
"I expect the program (QE2) to be carried through."
* MINNEAPOLIS FED PRESIDENT NARAYANA KOCHERLAKOTA, January 10
"The bar is very high for me," Kocherlakota said, on what it would take to consider stopping short the Fed's planned $600 billion bond-purchase program. "There would have to be a disorderly reaction of some kind in inflation expectations or in the behavior of the dollar."
Continue reading at Reuters...
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This is outstanding...
Song - F.R.A.U.D. - The Federal Reserve's Accounting Unit - The Dollar
The song is really quite good, and the Gilligan's Island insert is absolutely classic.
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Jan 14, 2011 at 12:16 AM
Reader Comments (5)
(Reuters) - The U.S. Federal Reserve's aggressive bond-buying plan could soon backfire unless the central bank gradually changes course to head off inflation, a top Fed official known for his hawkish stance said on Tuesday.
Philadelphia Federal Reserve Bank President Charles Plosser said the $600-billion quantitative easing plan, known as QE2, would need to be reconsidered if the U.S. economy's current "moderate recovery" picks up steam.
The prospect of sustained price deflation -- a worry for Fed Chairman Ben Bernanke and other backers of the controversial QE2 plan -- is highly unlikely in part because the Fed's massive reserves will eventually flow out into the economy, Plosser added.
"If the economy begins to grow more quickly and the sustainability of this recovery continues to gain traction, then the purchase program will need to be reconsidered along with other aspects of our very accommodative policy stance," Plosser said in a speech to the Risk Management Association.
"The aggressiveness of our accommodative policy may soon backfire on us if we don't begin to gradually reverse course," he said.
http://www.reuters.com/article/idUSTRE70A31420110111
Philadelphia Fed President Charles Plosser said the second round of "quantitative easing" purchases, known as QE2, may have had an effect on the financial markets, since they began in November. But it "stretches things," he said, to argue it has affected recent unemployment numbers and data on sales and spending.
http://www.reuters.com/article/idUSNLLBCE7SK20110111
song lyrics are here...
(Reuters) - Two top Federal Reserve officials offered differing views on monetary policy on Tuesday, with one warning the Fed's ultra-easy stance may soon backfire, and the other saying he is comfortable with it.
Richmond Fed President Jeffrey Lacker, who was unable to give the speech for personal reasons, is one of the central bank's most vocal hawks and says the Fed's additional bond purchases carry inflation risks.
http://www.reuters.com/article/idUSTRE7095YM20110112
http://3.bp.blogspot.com/_eeYt1gOHtiQ/TPhLUc2SjiI/AAAAAAAAAQQ/xLOG1mpuyWE/s1600/v122+Brother+can+you+spare+a+dime.jpg
But there's a solution...
http://3.bp.blogspot.com/_eeYt1gOHtiQ/TQL5PCxxzFI/AAAAAAAAASM/NSYKYbDqeQs/s1600/v131+Boy-clown+super-genius.jpg