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Economy
In reply to the discussion: Weekend Economists Mourn David Bowie 8 January 1947 – 10 January 2016 (1/15/16) [View all]Proserpina
(2,352 posts)19. With Liftoff Done, the Fed Revisits Its $4.5 Trillion Quandary
As Max Keiser often points out, you can't "taper" a Ponzi scheme...
http://www.bloomberg.com/news/articles/2016-01-15/with-liftoff-done-the-fed-revisits-its-4-5-trillion-quandary
Federal Reserve officials who spent months debating their first interest-rate increase in almost a decade are turning next to the thorny question of what to do with a balance sheet equivalent to the size of Japans economy.
A month after liftoff, turmoil in global financial markets has pushed out expectations for more rate hikes and raised concern about what tools are available to fight the next downturn. Vice Chairman Stanley Fischer has suggested the $4.5 trillion balance sheet could be maintained as a way to hold down longer-term Treasury yields while the short-term policy rate was lifted.
Fischers idea -- discussed in a Jan. 3 speech partly on strategies for pulling the short-term rate away from zero -- was taken up in more practical terms by New York Fed President William C. Dudley Friday. Reinvesting maturing bonds and putting off a reduction in the balance sheet until the federal funds rate is raised somewhat higher makes sense, Dudley said.
Having more dry powder in the form of higher short-term interest rates seems more desirable than less dry powder and a smaller balance sheet, he said.
more
http://www.bloomberg.com/news/articles/2016-01-15/with-liftoff-done-the-fed-revisits-its-4-5-trillion-quandary
Federal Reserve officials who spent months debating their first interest-rate increase in almost a decade are turning next to the thorny question of what to do with a balance sheet equivalent to the size of Japans economy.
A month after liftoff, turmoil in global financial markets has pushed out expectations for more rate hikes and raised concern about what tools are available to fight the next downturn. Vice Chairman Stanley Fischer has suggested the $4.5 trillion balance sheet could be maintained as a way to hold down longer-term Treasury yields while the short-term policy rate was lifted.
Fischers idea -- discussed in a Jan. 3 speech partly on strategies for pulling the short-term rate away from zero -- was taken up in more practical terms by New York Fed President William C. Dudley Friday. Reinvesting maturing bonds and putting off a reduction in the balance sheet until the federal funds rate is raised somewhat higher makes sense, Dudley said.
Having more dry powder in the form of higher short-term interest rates seems more desirable than less dry powder and a smaller balance sheet, he said.
more
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Weekend Economists Mourn David Bowie 8 January 1947 – 10 January 2016 (1/15/16) [View all]
Proserpina
Jan 2016
OP
Interesting how he changed changed his name from Jones to Bowie due to Davey Jones of the Monkees
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