Stephen Foley: Helicopter Ben rides again
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.US Outlook: The rotor blades are whirring again at the Federal Reserve helipad. Helicopter Ben – as chairman Ben Bernanke is known for showering money on the blazing fires of the credit crisis – has put new quantitative easing (QE) on the agenda for fighting deflation and a double-dip.
Now the size of the Fed's balance sheet is an explicit tool of monetary policy, it important to work out its relationship with interest rates. How much new money does the central bank have to print, and how many US Treasury bonds must it buy, to achieve a desired reduction in rates for businesses and homebuyers? Evidence from the QE programmes of the Federal Reserve and the Bank of England last year is that they lowered rates by a full percentage point in many areas. The question is whether the bang for central bank bucks was large because credit markets were unusually illiquid. Mr Bernanke's own research on Japan suggests that, in normal times, QE might have a much tinier impact.
As the chairman's chopper takes to the skies again, he is in urgent need of a compass.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments