Janet Yellen:
"As Japan found during its quantitative easing program, increasing the size of the monetary base above levels needed to provide ample liquidity to the banking system had no discernible economic effects aside from those associated with communicating the Bank of Japan’s commitment to the zero interest rate policy.
I think my views on this mirror those that you expressed in your opening comments, Mr. Chairman."
- FOMC Minutes from Dec 2008 [9]
[10]
How did that work out?
We assume principles go out the window when the orders come down from the banker-owners on high...
* * *
However, today we get more total hypocrisy from the newly found bond guru and hedge fund adviser via his blog...
Where [monetary policy] can be helpful is in supporting the return to full employment, and there the record has been reasonably good. Indeed, it seems clear that the Fed's aggressive actions are an important reason that job creation in the United States has outstripped that of other industrial countries by a wide margin.
The WSJ also argues that, because monetary policy has not been a panacea for our economic troubles, we should stop using it. I agree that monetary policy is no panacea, and as Fed chairman I frequently said so. With short-term interest rates pinned near zero, monetary policy is not as powerful or as predictable as at other times. But the right inference is not that we should stop using monetary policy, but rather that we should bring to bear other policy tools as well.
So while in 2008, QE had no discernible economic effects... in 2015 it is a powerful tool for lowering unemployment rates? What a farce!?
