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The Dangers of an Interventionist Fed
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John Taylor on the dual mandate for inflation and unemployment and discretionary policies by the U.S. Federal Reserve that ended up creating booms and busts in the U.S. economy. He advocates replacing the dual mandate of "maximum employment" and "stable prices," which was inserted into the Federal Reserve Act in the 1970's, with a single mandate for "long-run price stability." Taylor points out that this will still give the Fed flexibility, as it is focussed on long run price stability. The Fed does not have to overreact to short run increases in inflation. And he points out that this actually will work well for unemployment as the booms caused by an overextended period of low interest rates such as that in 2003-2005, have led to booms followed by busts with high unemployment.
John Taylor on U.S. Federal Reserve policies and booms and busts in the U.S. economy and no clear exit strategy
01/27/2009
Taylor points out that the dual mandate for maintaining unemployment and inflation goals has led to discretionary policies that have hurt the economy by leading to booms and busts. He calls for a single mandate on inflation goals. Taylor provides advice on the Romney Plan.
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Bhidé and Phelps: Central Banking Needs Rethinking
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The Dangers of an Interventionist Fed
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S.&P. 500 Dips After Fed Signals No New Stimulus
New York Times 04/04/2012
A delicate balancing act for the Federal Reserve to withdraw support that puts a dark cloud over the economy..
10/01/2009
Incrementally withdrawing support where and when possible will be a tough act for the Fed, after the Fed has committed $1 trillion so far as support to debt securtization markets that breathe life into the USA economy. Shiller says these markets are dead, we are stuck, and no one knows what will happen if they are hobbled for corporate real estate, mortgages, auto loans.
Grouped Articles
Wall Street Journal 08/01/2013
Fed Must Consider the World and All U.S. Employment
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How the Fed Can Avoid the Next Bubble
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Paralysis in the Debt Markets Is Deepening the Credit Drought
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New Order: No Money, No Problem
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Fed Frets About Commercial Real Estate
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Lawrence Lindsey on how Bernanke's Fed has boxed itself in with no choice but to keep interest rates low and no clear exit strategy
01/04/2010
Economist Lindsey says Fed chairman Bernanke has to keep interest rates low for the U.S. government to be able to cope with the increase in borrowing costs that normal interest rates would bring. The normalized interest rate - the rate at which the U.S. government was able to borrow for the last three decades- is about 5.7%. At that rate the U.S. government would add $800 billion to borrowing costs for 2021, says Lindsey. The U.S. now borrows at about 2.5%
Grouped Articles
Once Again, the Fed Shies Away From the Exit Door
Wall Street Journal 07/11/2013
Wanted: A Boring Leader for the Fed
New York Times 08/20/2013
Reflections by America’s Buddha of Banking
New York Times 01/16/2014
Wall Street Journal 06/15/2011
Fed Darkens Its Outlook but Plans No Changes
Wall Street Journal 06/23/2011
The Deficit Is Worse Than We Think
Wall Street Journal 06/28/2011
Low interest rates and Fed policy in 2010-2012
10/02/2010
Grouped Articles
New York Times 10/16/2014
Enough With the Low Interest Rates!
Wall Street Journal 10/02/2010
Wall Street Journal 10/25/2010
Wall Street Journal 10/26/2010
Opinions Are Split on Fed Policy Move
Wall Street Journal 11/01/2010
Ben S. Bernanke - What the Fed did and why: supporting the recovery and sustaining price stability
Washington Post 11/04/2010
The U.S. Federal Reserve's exit strategy from a loose monetary policy - 2011-2015
05/18/2011
Grouped Articles
Fed Officials Try to Set the Market at Ease
Wall Street Journal 06/24/2013
Wall Street Journal 07/11/2013
FX HORIZONS: The Fed’s Risky Codependency with Markets
Wall Street Journal 07/11/2013
Once Again, the Fed Shies Away From the Exit Door
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Bhidé and Phelps: Central Banking Needs Rethinking
Wall Street Journal 07/16/2013
Bernanke Plays Down Link Between Jobless Rate, Fed Moves
Wall Street Journal 07/18/2013
Comparisons of the U.S. Economy with Japan, considering the Federal Reserve's easy money policy and little lending by banks.
10/15/2009
Is the US economy already in a liquidity trap with exploding monetary growth and little consumer lending asks Christopher Wood. Views of other experts on the subject.
Grouped Articles
Target Is 'Flexible,' Says Japan Bank Chief
Wall Street Journal 04/12/2013
Japan Is a Model Not a Cautionary Tale
New York Times 06/09/2013
Sluggish Economic Recovery Proves Resilient
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Is the U.S. Economy Turning Japanese?
Wall Street Journal 10/27/2009
Economist 10/15/2009
Wall Street Journal 12/08/2009
Allan Meltzer's action plan for the economy includes reversing the excessive monetary easing starting now in October 2009 so that it can be done gradually and not hurt the economy through sudden contraction later on.
10/01/2009
Allan Melzer was co-founder an co-chairman of the Shadow Open Market Committee for over two decades, advisor to Presidents Kennedy and Reagan, and one of the foremost experts on the Federal Reserve System. He calls for the U.S. Federal Reserve to adopt an early exit strategy from loose monetary policies.
Grouped Articles
Once Again, the Fed Shies Away From the Exit Door
Wall Street Journal 07/11/2013
Bhidé and Phelps: Central Banking Needs Rethinking
Wall Street Journal 07/16/2013
Preventing the Next Financial Crisis
Wall Street Journal 10/23/2009
Is the U.S. Economy Turning Japanese?
Wall Street Journal 10/27/2009
Economist 10/15/2009
Jobs Now, Deficit Reduction Later
BusinessWeek 10/29/2009
Raghuram Rajan on the risks to the U.S. economy and society before the 2008 financial crisis
01/02/2009
Is Bernanke making the same mistake made by Greenspan by keeping interest rates too low for too long. Would a stronger safety net in the US ease pressures on the US Federal Reserve to do excessive monetary easing and instead allow the Fed to let a more natural rise in employment take place? He isn't ideological and joins John Taylor, George W Bush's economic advisor, and Allan Meltzer of Carnegie-Mellon, in questioning Bernanke's excessive monetary easing. In 2005, Rajan was prescient in questioning the Greenspan Fed's policies and the risks from excessive leveraging in the financial system at the Jackson Hole conference.
Grouped Articles
Mr. Rajan Was Unpopular (But Prescient) at Greenspan Party
Wall Street Journal 01/02/2009
Interest Rates: The Zero Percent Solution
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The Case Against the Bernanke-Obama Financial Rescue
New York Times 05/16/2014
Charting the Economic Fault Lines
BusinessWeek 02/10/2011
Wall Street Journal 02/05/2011
How much of a factor were low interest rates under Greenspan in creating a bubble in housing prices?
01/02/2009
Fed chairman Bernanke was a Fed Governor who advocated low interest rates at the time. His response. Expert opinion.
Grouped Articles
Wanted: A Boring Leader for the Fed
New York Times 08/20/2013
What's Needed in the Next Fed Chief
New York Times 09/15/2013
Fed chief Bernanke urges better financial regulation to prevent crises
Washington Post 01/04/2010
Lax Oversight Caused Crisis, Bernanke Says
New York Times 01/04/2010
The Fed and the Crisis: A Reply to Ben Bernanke
Wall Street Journal 01/10/2010
Bernanke’s Bid for a Second Term at the Fed Hits Resistance
New York Times 01/23/2010
Liquidity Trap in Japan and the U.S.
03/17/2008
With the demand curve for money horizontal further increases in the money supply do little to lower interest rates, or as in the current situation where the interest rates in the US are virtually at zero so that further increases in the money supply do little to stimulate the economy. As unemployment is growing and the financial sector weak, Bernanke and the Fed see other ways in which quantitative easing helps a recovery. Here Chritopher Woods compares today's situation in America to that of postbubble Japan. He says America is already in a liquidity trap. And the regulatory forbearance to cleanup the banking mess is similiar to that in postbubble Japan when it took the government years to get up the will and strength to straighten out the mess including breaking up the banks that are too big to fail.
Grouped Articles
Is the U.S. Economy Turning Japanese?
Wall Street Journal 10/27/2009
Economist 10/15/2009
Economist 12/30/2009
Fed’s Bullard Raises Policy Concerns
Wall Street Journal 07/29/2010
Opinions Are Split on Fed Policy Move
Wall Street Journal 11/01/2010
Ben S. Bernanke - What the Fed did and why: supporting the recovery and sustaining price stability
Washington Post 11/04/2010
Why high unemployment and the high percentage of the long term unemployed is determining U.S. Federal Reserve interest rate policy in 2012-2014
01/27/2009
With 40% of the unemployed in the U.S. shown as long term unemployed, mismatch in skills and other structural problems with unemployment, the U.S. Federal Reserve policies of Fed chairman Bernanke are geared to addressing this problem.
Grouped Articles
Stimulus and the Depression: The Untold Story
Wall Street Journal 09/26/2011
Fed Officials Try to Set the Market at Ease
Wall Street Journal 06/24/2013
Wall Street Journal 07/11/2013
FX HORIZONS: The Fed’s Risky Codependency with Markets
Wall Street Journal 07/11/2013
Bernanke Plays Down Link Between Jobless Rate, Fed Moves
Wall Street Journal 07/18/2013
Economy May Be Getting Its Wings Clipped
Wall Street Journal 07/30/2013
The U.S. Federal Reserve's policy and actions in 2012-2016
06/15/2011
Grouped Articles
A Hawkish Signal Bernanke Didn't Send
Wall Street Journal 06/25/2013
Wall Street Journal 07/11/2013
FX HORIZONS: The Fed’s Risky Codependency with Markets
Wall Street Journal 07/11/2013
Once Again, the Fed Shies Away From the Exit Door
Wall Street Journal 07/11/2013
Bernanke Plays Down Link Between Jobless Rate, Fed Moves
Wall Street Journal 07/18/2013
In Surprise, Fed Decides to Maintain Pace of Stimulus
New York Times 09/18/2013
U.S. Federal Reserve's policy and actions in 2010-2013
08/27/2010
Grouped Articles
Fed Officials Try to Set the Market at Ease
Wall Street Journal 06/24/2013
Bernanke Plays Down Link Between Jobless Rate, Fed Moves
Wall Street Journal 07/18/2013
In Surprise, Fed Decides to Maintain Pace of Stimulus
New York Times 09/18/2013
Economists See Nominee as Slightly More Dovish Bernanke
Wall Street Journal 10/10/2013
Yellenâs Path From Liberal Theorist to Fed Voice for Jobs
New York Times 10/09/2013
The Yellen Fed? Precise and Predictable
New York Times 10/09/2013
Allan Meltzer's program for the economy and advice to the Fed and policymakers in 2011-2012
08/11/2011
Allan Meltzer on the dangers of a loose monetary policy and the need for an early exit strategy.
Grouped Articles
Once Again, the Fed Shies Away From the Exit Door
Wall Street Journal 07/11/2013
Bhidé and Phelps: Central Banking Needs Rethinking
Wall Street Journal 07/16/2013
The Folly of Economic Short-Termism
Wall Street Journal 08/11/2011
This Time, Maybe the U.S. Is Japan
Wall Street Journal 08/13/2011
Kansas City Fed President Defies Conventional Wisdom
New York Times 08/13/2011
From World War II, Economic Lessons for Today
New York Times 08/13/2011
U.S. Federal Reserve policies leading to boom and bust periods for the U.S. economy and the S&P near 1500 in March 2012
03/29/2012
During a 6 month period between October 2011 and March 2012 the S&P 500 moves from a low of 1037 on October 27, 2011, to 1420 in March 2012. This followed another round of quantitative easing by the Federal Reserve following an earlier round in 2010.
Linked Articles
S.&P. 500 Dips After Fed Signals No New Stimulus
New York Times 04/04/2012
The Dangers of an Interventionist Fed
Wall Street Journal 03/29/2012
Short termism of an interventionist U.S. Federal Reserve and the advantages of a rule based monetary policy at the Fed
08/11/2011
John Taylor and Allan Meltzer point to the risks of short termism and discretionary policies at the Fed. Taylor says a single mandate for inflation should replace the current dual mandate for both inflation and unemployment so that monetary policy can be rule based avoiding the boom and bust periods hitting the U.S. economy in the last decade, when interest rates were set too low using discretionary policy.
Linked Articles
The Dangers of an Interventionist Fed
Wall Street Journal 03/29/2012
The Folly of Economic Short-Termism
Wall Street Journal 08/11/2011
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