Monday, September 05, 2016

The Federal Reserve’s Interest Rate Conundrum
GoldMoney's Alasdair Macleod points out how the Federal Reserve is "seemingly unaware of early signs of price inflation" .. in this essay he explores "factors that impede a return to interest rate and monetary normality, and it concludes that a rise in U.S. interest rates would probably be accompanied by more quantitative easing, perhaps on a discretionary basis." .. conclusion: "The addition of discretionary QE also has the merit of giving the Fed ammunition to manage the U.S. bond market if needed and to give the incoming president some spending flexibility. It would also lessen the likelihood of subsequent counterproductive dollar strength. It would be a neat political resolution for the short-term, but from an economic perspective, it would actually resolve nothing by deferring the real interest rate decision, as experience elsewhere has demonstrated."
LINK HERE to the essay

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