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Chicago Fed's Charles Evans sees a "liquidity trap" that is causing the supply of savings to...

Chicago Fed's Charles Evans sees a "liquidity trap" that is causing the supply of savings to exceed the demand for investment even at very low interest rates, arguing again for rates to be tied to improvement in unemployment unless inflation rises above 3%. "There is simply too much at stake for us to be excessively complacent while the economy is in such dire shape," he says.
Comments (5)
  • Josh Krause
    , contributor
    Comments (1361) | Send Message
     
    I have no problem with this as long as they use CPI w/ Food & Energy.

     

    What, we can't QE because any QE will send Oil to the moon?

     

    Well isn't that a damn shame.

     

    Let's get Volcker back in the Fed chair. Sure it will hurt, but at least an adult will be seated at the head of the table.
    5 Dec 2011, 12:32 PM Reply Like
  • mcostigane
    , contributor
    Comments (44) | Send Message
     
    Dire Shape? Wait a second, the other Fed Heads are saying things are turning around!.....could it be that this is not the case? /sarc
    5 Dec 2011, 01:49 PM Reply Like
  • WMARKW
    , contributor
    Comments (10371) | Send Message
     
    "Liquidity traps are rare and difficult events to manage. They present a clear and present danger that we risk repeating the experience of the U.S. in the 1930s or that of Japan over the past 20 years" Evans.

     

    Clear and Present Danger....just what the President needs for an Executive Order.
    5 Dec 2011, 07:00 PM Reply Like
  • WMARKW
    , contributor
    Comments (10371) | Send Message
     
    "Fortunately, between these two extreme scenarios, there is a robust middle ground policy approach. The Fed could sharpen its forward guidance in two directions by implementing a state-contingent policy. The first part of such a policy would be to communicate that we will keep the funds rate at exceptionally low levels as long as unemployment is somewhat above its natural rate. The second part of the policy is to have an essential safeguard — that is, a commitment to pull back on accommodation if inflation rises above a particular threshold." Evans

     

    Geeze....I can't tell you how underwhelmed I am.....you mean the silver bullett is to allow 3% inflation....wow!
    5 Dec 2011, 07:03 PM Reply Like
  • Josh Krause
    , contributor
    Comments (1361) | Send Message
     
    3% as measured by the Fed of course. Good thing that we can eat iPads and run our cars on iPhones.
    5 Dec 2011, 07:25 PM Reply Like
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