A leading expert of monetary policy is urging the Fed to reform its policy guidance to make...


A leading expert of monetary policy is urging the Fed to reform its policy guidance to make clear it will hold interest rates close to zero, even after the economy starts to recover. Columbia's Michael Woodford told officials they need to better explain the reason behind any rate forecast, because current guidance could be having a perverse impact of simply implying that the economy is going to be weak until the end of 2014, which will not entice businesses or consumers to increase spending.
Comments (23)
  • Drew Robertson
    , contributor
    Comments (373) | Send Message
     
    Damn this makes sense. Upvote.
    31 Aug 2012, 07:25 PM Reply Like
  • bosco115
    , contributor
    Comments (250) | Send Message
     
    This isn't reddit.
    1 Sep 2012, 11:52 AM Reply Like
  • dave504
    , contributor
    Comments (71) | Send Message
     
    You apparently haven't been reading the Apple/Samsung threads.
    1 Sep 2012, 06:08 PM Reply Like
  • SoldHigh
    , contributor
    Comments (991) | Send Message
     
    The economy cannot recover until the entity which has its boot on the economy's throat is removed from office. Those with a respectable degree of competency regarding economics and managing business know this.
    31 Aug 2012, 07:41 PM Reply Like
  • CautiousInvestor
    , contributor
    Comments (3090) | Send Message
     
    Excellent comment SoldHigh. I would only add that by using the same logic changing the langage as proposed could have the "perverse" effect of suggesting the economy shall remain weak indefinitely rather weak through 2014.
    1 Sep 2012, 07:50 AM Reply Like
  • kmi
    , contributor
    Comments (4583) | Send Message
     
    A political climate of 'no-compromise' and an unresolved 'fiscal cliff' is why no one is going to 'increase spending' until after the election, a lot of sitting on hands till then.
    1 Sep 2012, 08:19 PM Reply Like
  • Tony Petroski
    , contributor
    Comments (6356) | Send Message
     
    "A leading expert of monetary policy is urging the Fed to reform its policy guidance to make clear it will hold interest rates close to zero..."

     

    Try this:

     

    "A leading expert of labor policy is urging the Obama administration to reform its policy guidance to make it clear it will mandate men work for wages close to zero..."

     

    Keynesianism sure is fun, 80 years after it's been shown to be a bust.
    31 Aug 2012, 08:21 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9903) | Send Message
     
    ZIRP is largely irrelevant to economic recovery. Consumers can't spend what they don't earn, ie. declining real incomes. There is just weak demand and will continue to be weak demand until real incomes improve. Business don't need to invest without the demand.
    31 Aug 2012, 08:54 PM Reply Like
  • Tack
    , contributor
    Comments (16277) | Send Message
     
    What will motivate buyers to buy, especially large credit-financed acquisitions, is for rates to start to move upward. As long as rates are promised to remain low indefinitely, nobody has to be in a hurry to make a decision and lock in those low rates.

     

    When's the last time you saw a car dealership think it could boost its business by running a TV ad, saying that special zero-interest financing will be maintained indefinitely, so there's no need to rush on down to your dealer? Apparently, the auto dealers are smarter than the Fed.
    31 Aug 2012, 09:02 PM Reply Like
  • Fr33f0rm
    , contributor
    Comments (300) | Send Message
     
    You're proposing a short term solution to a long term problem. You're proposing "Cash for clunkers"...which had a short term boost in sales but then created a void in car sales for months afterwards.
    1 Sep 2012, 02:02 AM Reply Like
  • wyostocks
    , contributor
    Comments (9113) | Send Message
     
    "impact of simply implying that the economy is going to be weak until the end of 2014........"

     

    What the hell else do you think he is saying?
    31 Aug 2012, 09:05 PM Reply Like
  • JohnLocke
    , contributor
    Comments (383) | Send Message
     
    What does the interest on 16 Trillion in debt look like?

     

    16 Trillion at 1% Interest = 16 Billion
    16,000,000,000,000 x.01= 16,000,000,000

     

    2% = 31 Billion
    3% = 48 Billion

     

    How about 1980-85 interest rates?

     

    18%=2,880,000,000,000 Yup, that's 2.8 Trillion

     

    If I were a banker I would want zero interest... Thay way I can take your money and I don't have to give you anything for it, what a great plan!!!
    31 Aug 2012, 09:18 PM Reply Like
  • into dark shadows
    , contributor
    Comments (460) | Send Message
     
    Hey John, here's a good one about a trillion.

     

    One trillion seconds,(as in 60 seconds in a minute),equals what?

     

    32,000 YEARS!

     

    God help us!
    31 Aug 2012, 11:09 PM Reply Like
  • coddy0
    , contributor
    Comments (1199) | Send Message
     
    JohnLocke Corrected
    What does the interest on 16 Trillion in debt look like?

     

    16 Trillion at 1% Interest = 160 Billion
    16,000,000,000,000 x.01= 160,000,000,000

     

    2% = 320 Billion
    3% = 480 Billion

     

    How about 1980-85 interest rates?

     

    18%=2880000000000 Yup, that's 2.88 Trillion

     

    If I were a banker I would want zero interest... Thay way I can take your money and I don't have to give you anything for it, what a great plan!!!
    1 Sep 2012, 12:20 AM Reply Like
  • JohnLocke
    , contributor
    Comments (383) | Send Message
     
    All those pesky zeroes made my eyes cross...LOL

     

    Thanks for the correction:-)
    1 Sep 2012, 03:26 PM Reply Like
  • sheeple2012
    , contributor
    Comments (203) | Send Message
     
    Jackson's Hole 2012 Cliff Notes:

     

    Bernanke is insane...
    31 Aug 2012, 09:23 PM Reply Like
  • mike mohr
    , contributor
    Comments (452) | Send Message
     
    Fed is out of bullet they are bluffing. Short if you can by selling long dated out of money calls
    31 Aug 2012, 09:46 PM Reply Like
  • whidbey
    , contributor
    Comments (3539) | Send Message
     
    His plan is for a disaster. Why? The comments are generally those of anyone who understands Austrian Economics, or has common sense. Prehaps the same thing. Great board great comments.
    31 Aug 2012, 10:12 PM Reply Like
  • Jason Merriam
    , contributor
    Comments (955) | Send Message
     
    Protracted low rate environments are dangerous for many reasons. It implies a disturbance to the credit markets (sentiment) and it quantifies why the economy remains mired. No demand!

     

    However, it seems folly to blame Bernanke when a guy like Sen. Chuck Schumer can state publicly (and I paraphrase here) that "due to the political realities in this country, you (the Fed) is the only game in town.

     

    Translation: Politicians can't or won't do their @!%?ing job, so it's up to the Fed to fix it. Let go of my aaahhm!!!

     

    This is one of the many great reasons why we need term limits!!!
    31 Aug 2012, 11:04 PM Reply Like
  • into dark shadows
    , contributor
    Comments (460) | Send Message
     
    2014?
    Man,
    we could actually be out of the global depression Bubble Blowin Ben and his QE stun gun have wrought by then!

     

    Mitt Romney will kick B.B.B. out the door and replace him with Rand Paul for all we know.

     

    How about Tax cheat Timmy?
    I say Mitt has had about all of that charlatan, for the whole country could take!
    Ron Paul at Treasury?
    These things are way more likely than some pie in the shy prognostications about 2014!

     

    Lets see what happens on 12 /21 and if we get rid of the boot on the throat of our once free market system!

     

    We need a mechanic to fix this once mighty machine, get her purrin' again...
    Let's give Mitt a shot,
    we cant do any worse than this boob!

     

    America deserves an honest, ethical leader!
    God save the republic!
    31 Aug 2012, 11:06 PM Reply Like
  • apberusdisvet
    , contributor
    Comments (3098) | Send Message
     
    I feel especially sad for my country when I see the above partisan comments which are so naive as to the predominant reason why we are in our current situation. It's all about the criminal banking mafia, folks, and its incremental purchase of politicians throughout the globe, not just here in the US. Whether Obama, or Romney, the puppet strings will still be pulled from behind the curtain until we are all obedient debt slaves under a totalitarian regime.

     

    Once great America has morphed into the 4th Reich; the Bill of Rights has been abrogated; the Constitution is now what "they" say it is. Both R & D politicians have been thoroughly co-opted and corrupted to serve an agenda which has moved with amazing pace since 9/ll. The Patriot Act, the NDAA, the unaccountable Czars, the Executive Orders issued without Congressional oversight, the continuing wars, the Gestapo-like TSA, the VIPR squads, the militarization of local police forces. The recent purchase of millions of rounds of hollow point bullets (illegal under the Geneva Convention), not by the military, but by DHS should be a wake-up call. Something very wicked this way comes. Wake up people.
    1 Sep 2012, 09:34 AM Reply Like
  • wyostocks
    , contributor
    Comments (9113) | Send Message
     
    apberusdisvet

     

    Your second paragraph gives all the reasons why partisan comments are important to any discussion.
    1 Sep 2012, 12:04 PM Reply Like
  • DaLatin
    , contributor
    Comments (1522) | Send Message
     
    Greatest Lie of this century ! Ben B. to Congress !

     

    " I will not monitize the debt ! "

     

    I've got 95% of my Foundation's assets in wet land and real PMs.

     

    Yes,I've got a large stock account,but,in % terms it's nada ! When you here Ben or SA # 1 Alan say there is absolutely no inflation and Fed policy is fine an working well you must realize that good old nutty professor Dr. Paul is actually the only sane cork floating in the bottle.

     

    Ben B. must pooh pooh the fact that gold is real money and ignore 5000 years of what written history shows because if you use gold as a comparison against stocks it screams so loud you'd have to be insane to own stock !

     

    Consider this.. Almost all commodities have a use of some sort,but, gold's only use in being money. Yes it shows in the form of jewelry,but, the billions who buy gold,buy it as money. The Asians and Indians would never buy the 14 K stuff sold in the US or EU.18K or higher or they won't touch it.

     

    Truth be told the prices of gold ~ oil have remained constant and only the paper value of the Reserve dollar has collapsed ! And, this is by design as the Fed & other main Central cartels understand politicos won't or can't remedy they situation and keep there jobs.

     

    To see what I am saying you only need to compare a 10 year chart of gold to the S&P.. Clear as a bell. The Liberty Bell as it is that clear.Back then 3 to 4 ounces of gold bought you a share of the S&P and now 0.08% of an ounce buys you one share of the S&P !

     

    So, when you here all the nonsense that the S&P and DOW are about to make new highs and the economy is growing and all the other bla bla bla then your living is wonderland..

     

    Try selling a share(s) of the S&P and buying gold,oil or land and see what you get for that one share of the S&P. And, that is even considering that US real estate has tanked back to 2003 levels !

     

    Yep, the Fed is the ultimate ponzi scheme and the WS addicts actually think they live in the real world,but, the 7 billion + people who eat and try to survive see it everyday as they fight to survive.

     

    The US standard of living has been beyond reality and as the next few years tick by the poverty level will keep growing and the mean wealth will continue to shrink even though it's at multi decade lows now !

     

    Go ahead ! Ignore Mr. "make my day" and keep the same CEO.. I dare you ! smiles..... I left ! Dalatin
    3 Sep 2012, 04:38 AM Reply Like
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