“Most of the economic policies that support robust economic growth in the long run are outside the province of the central bank,” he said.And yet the Fed does nothing. Awesome.
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"The recent data have indicated that economic growth during the first half of this year was considerably slower than the Federal Open Market Committee had been expecting, and that
temporary factors can account for only a portion of the economic weakness that we have observed. Consequently, although we expect a moderate recovery to continue and indeed to strengthen over time, the Committee has marked down its outlook for the likely pace of growth over coming quarters. "With commodity prices and other import prices moderating and with longer-term inflation expectations remaining stable, we expect inflation to settle, over coming quarters, at levels at or below the rate of 2 percent, or a bit less, that most Committee participants view as being consistent with our dual mandate."
Friday, August 26, 2011
Worse than I thought...
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«And yet the Fed does nothing. Awesome.»
ReplyDeleteAnd what can they do? If they make money even looser, most of what happens is higher asset prices in the USA and higher employment and wages in China and India.
Low cost of money also makes it easier for companies with USA plants to liquidate them and move them to China and India.
The basic problem is that whenever there a business has to decide where to invest their dollars in production capital the spreadsheet says to invest outside the USA.
Making those dollars more plentiful and cheaper is not going to change that result, quite the opposite.
Re: "And what can they do? If they make money even looser, most of what happens is higher asset prices in the USA and higher employment and wages in China and India."
ReplyDeleteLooser money would mean a weaker dollar, increasing our net exports, stimulating aggregate demand and employment. A weaker dollar would make it more attractive for companies, both US and foreign, to make investments in the US. Higher asset prices in the US would lead to improved household balance sheets, which could spur increased spending. I agree that India and China would also be helped, since everyone benefits from faster US growth, but this hardly seems like a reason not to stimulate the US economy.
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ReplyDeleteHi Thorstein. Not a good news for us pal. Economic policies should be beneficial to all. It's the other way around here.
Hello. You can truly qualify as the President's Economic adviser. At times, he badly needs one.
ReplyDeleteThor, the last statement is so sad. The fed is so irresponsible. Too bad.
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ReplyDeleteThis is so sad. Thanks for tackling this issue. The country should be the one who gain benefits.