Wed Dec 12, 2012, 01:32 PM
Recursion (31,389 posts)
FOMC Adopts Game-Changing Conditional Inflation Targeting Rule
Source: Slate Moneybox
This is huge. With today's policy announcement, the Federal Reserve's Open Market Committee has stopped screwing around and started doing real expectations-based monetary easing.
The new policy is a version of the plan from Charles Evans that I wrote about in March. They've said that interest rates will remain low until unemployment falls below 6.5 percent or the inflation rate exceeds 2.5 percent. That is a softer and weaker form of monetary easing than Evans originally proposed, but apparently a meager inflation target is the price you have to pay politically to get this done. As I explained yesterday, this kind of strategy should be partially successful in getting corporate cash off the sidelines in a way that "certainty" and "confidence" won't. The higher inflation target makes cash-like safe liquid investments look slightly less reasonable than they did yesterday, while the faster real growth implied by the unemployment target makes real investments in increased capacity look better.
Read more: http://www.slate.com/blogs/moneybox/2012/12/12/fomc_adopts_game_changing_conditional_inflation_targeting_rule.html
What kills me not had better start running
6 replies, 1296 views
FOMC Adopts Game-Changing Conditional Inflation Targeting Rule (Original post)
Response to Recursion (Original post)
Wed Dec 12, 2012, 01:39 PM
randome (18,188 posts)
1. I'm no economist but that sounds interesting.
JP Morgan says we may be in for a boom cycle if the assholes in Congress avoid pushing us off the cliff. This sounds like a plan that would make that possibility clearer.
Response to randome (Reply #1)
Wed Dec 12, 2012, 03:23 PM
JDPriestly (41,393 posts)
6. I agree with JP Morgan (for what it is worth).
I think the economy is growing faster than people realize just based on the numbers.
I got out and campaigned for Obama in my lower middle class area. People seemed a lot, lot, lot more optimistic than they were just two years ago.
Obama's re-election strengthened the more positive feeling that people have.
We have at least, in my opinion, overcome a lot of the depressed, fearful sense that people had during the Bush administration (especially the final year of it) and thereafter. I sure hope I am right. When I went Christmas shopping yesterday (at an inexpensive store), my ideas were confirmed. Even lower income people are feeling more confident.
Response to unblock (Reply #2)
Wed Dec 12, 2012, 01:58 PM
Lionessa (3,894 posts)
3. Or conversely sways with the unemployment figures, that'll assure they
invest here if they want low tax rates.
We can't be the champions of the poor and meek if we alert or harrass regarding that which might be associated with the poor and meek in this country, like spellos or typos or gammaros or foul language.
Response to Lionessa (Reply #3)
Wed Dec 12, 2012, 02:00 PM
unblock (24,402 posts)
4. good idea. just about any formula would be better than "status quo"
the economy is always changing, so having a fiscal policy that constantly requires congress to change it to keep up is not, let's say, well-engineered.