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Nice work by the FRB's marketing team on this story... it looks like debt monetization is the solution to all of our problems.
Also, I think we have an early candidate for understatement of the year: "The Federal Reserve's two rounds of asset purchases ... have probably helped the U.S. avert deflation"
http://www.frbsf.org/publications/ec.../wp11-01bk.pdf
Also, I think we have an early candidate for understatement of the year: "The Federal Reserve's two rounds of asset purchases ... have probably helped the U.S. avert deflation"
Fed's QE Program Should Help Lower Unemployment, Fed Paper Says
The Federal Reserve's two rounds of asset purchases totaling $2.3 trillion should reduce the U.S. jobless rate 1.5 percentage point by next year and have probably helped the U.S. avert deflation, central-bank researchers said.
“The Fed’s large-scale asset purchase program is providing significant support to real economic activity and the labor market,” the researchers said in a paper released today. “Moreover, the program may also be offsetting undesirable deflationary pressures appreciably.”
The central bank bought $1.7 trillion of mortgage debt and Treasuries through March 2010 as it sought to reduce the cost of borrowing and pull the U.S. out of a recession. The Federal Open Market Committee then decided on Nov. 3 to buy $600 billion of Treasuries through June in a policy known as QE2 for a second round of quantitative easing.
Policy makers unanimously pledged on Jan. 26 to press on with the bond purchase plan, saying in a statement the recovery is “continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions.”
"Increased hiring lowers the unemployment rate by 1.5 percentage points compared with what it would have been absent the Fed’s asset purchases,” the researchers said.
The Federal Reserve's two rounds of asset purchases totaling $2.3 trillion should reduce the U.S. jobless rate 1.5 percentage point by next year and have probably helped the U.S. avert deflation, central-bank researchers said.
“The Fed’s large-scale asset purchase program is providing significant support to real economic activity and the labor market,” the researchers said in a paper released today. “Moreover, the program may also be offsetting undesirable deflationary pressures appreciably.”
The central bank bought $1.7 trillion of mortgage debt and Treasuries through March 2010 as it sought to reduce the cost of borrowing and pull the U.S. out of a recession. The Federal Open Market Committee then decided on Nov. 3 to buy $600 billion of Treasuries through June in a policy known as QE2 for a second round of quantitative easing.
Policy makers unanimously pledged on Jan. 26 to press on with the bond purchase plan, saying in a statement the recovery is “continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions.”
"Increased hiring lowers the unemployment rate by 1.5 percentage points compared with what it would have been absent the Fed’s asset purchases,” the researchers said.