Sunday, January 16, 2011

On Unemployment, Inflation and Flawed Fed Logic

Ken Hasner submits:

The sum total of Fed actions over the past 3 years can probably be summed up as the central bank attempting to create its own reality. They have committed to the following :

  • Keeping deflation at bay and raising the inflation rate
  • Keeping the Fed Funds rate low for an indefinite period (forever?)
  • QE1 and Q2 (and Q3)? (Quantitative Easing - the purchase of US government securities in the open market)
  • Supposedly working toward full employment while stating that it will take 4 to 5 years for employment to recover?

All of these actions are the result of a single fact: They are compensating for failing to do the job they were tasked with from 2000 to 2008. They failed and we pay and pay.


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