Monday, 1 July 2013

Can Bernanke Brake Without Derailing?

By Frank Shostak

According to most commentators, reducing monetary stimulus and winding down the balance sheet of the Fed without major economic disruptions is going to be a major challenge for US central bank policy makers. On Wednesday, June 19 Fed Chairman Ben Bernanke, said that given an improved outlook on the economy, the US central bank may moderate the pace of monetary pumping. According to Bernanke, by mid-2014 the Fed may even end the purchasing of assets.

Is it possible to slow down the pace of monetary pumping without major side effects?

According to the popular way of thinking, on account of major shocks prior to 2008 emanating from disruptions in the credit markets, the US economy was severely dislocated from a path of self-sustaining economic growth.

As a result, since 2008 the Fed has had to step in with massive monetary pumping to bring the economy onto the path of economic growth.

Read full article...

No comments:

Post a Comment