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was not mine but here
"Quantitative Tightening Is Not Quantitative Tightening" Says St. Louis Fed
(Op-ed viaAuthored by Mike Shedlock via MishTalk)
St. Louis Fed president James Bullard discusses Quantitative Tightening (QT). As usual, he makes little sense.
James Bullard explains: When Quantitative Tightening Is Not Quantitative Tightening.
James Bullard explains: When Quantitative Tightening Is Not Quantitative Tightening.
The actual effects of QE appear to be far from neutral. There are many ideas about why this may be so. One leading candidate theory is that QE did not have direct effects but did send a credible signal about how long the FOMC intended to keep the policy rate near zero.
The signaling argument seems to work reasonably well if the policy rate is near zero. In that situation, the FOMC may wish to signal convincingly that it will keep the policy rate near zero “for longer”—i.e., beyond the time that an ordinary approach to monetary policy would call for rising rates. QE may have been a good approach to accomplish this objective.
The actual effects of QE appear to be far from neutral. There are many ideas about why this may be so. One leading candidate theory is that QE did not have direct effects but did send a credible signal about how long the FOMC intended to keep the policy rate near zero.
The signaling argument seems to work reasonably well if the policy rate is near zero. In that situation, the FOMC may wish to signal convincingly that it will keep the policy rate near zero “for longer”—i.e., beyond the time that an ordinary approach to monetary policy would call for rising rates. QE may have been a good approach to accomplish this objective.
Making Stuff Up As We Go Along
Supposedly QE had no direct effect. Rather it had an indirect one. This is the hindsight given today.
The next time, when something different happens, the Fed will give different hindsight, always with the implied message it did the right thing.
Questions for Bullard
Why didn't QE work very well for the EU? Japan?
Was the goal of QE to raise inflation as the BLS measures it, or raise asset prices and create bubbles?
If QT doesn't matter, then why the hell did the Fed abandon it, a week or so after announcing QT was on auto-pilot?
If it doesn't matter, why not just undo all of it right now?
Of Ivory Towers and Wizards
In regards to question number two, the Fed surely succeeded at blowing bubbles.
These wizards sit in their ivory tower group-think boxes and spout complete nonsense about the Phillips Curve, inflation expectations and the meaning of inflation itself while ignoring the massive bubbles they blow while doing so.
Stupidity Well-Anchored
Two days ago NY Fed President John Williams reiterated complete nonsense on the Phillips Curve and inflation expectations.
Bullard offered further evidence that Economic Stupidity and Fed Groupthink Remain "Well-Anchored"
https://www.zerohedge.com/news/2019-02-25/quantitative-tightening-not-quantitative-tightening-says-st-louis-fed
Honk!
sorry miss-fire