By Robert P. Murphy
Now that the third round of quantitative easing (“QE3″) has officially ended, proponents of looser money are gleefully pointing to low U.S. Treasury yields as (apparent) proof that the Fed never had anything to do with low interest rates. Ironically, these very critics themselves have earlier explained why the Fed would affect interest rates–if at all–through the stock of its balance sheet holdings, not through the rate of flow of its purchases. After documenting the issue with respect to Treasury securities, I’ll switch to gold and make it so obvious that even Krugman should see his non sequitur.
