“One disadvantage of asset purchases relative to conventional monetary policy is that we have much less experience in judging the economic effects of this policy instrument, which makes it challenging to determine the appropriate quantity and pace of purchases and to communicate this policy response to the public,”
Ben Bernanke, quoted in the NY Times, 10/15/10
-KD
4 comments:
What I really love about banker speak ---it sounds like "we know exactly what we are doing" because of the erudite prose - but means the exact opposite.
At least in Jackass 3-D when they launch the Jetski into the front lawn they admit that anything might happen.
This reminds me of Denninger's repeated highlighting of the fact that the Fed has been buying "assets that it isn't ?legally allowed to. I think the law was set in place for a reason...
That's scary--since they don't really even know what the specific effects of conventional monetary policy are. . .
What does that Hippocratic Oath say?
"First, do no harm." Ben is getting himself in deep here--does he realize that he and the Fed are in line for the blame when the economy goes wrong? That's probably why the Fed governors are lining up against him--they care about their institution, but BB can always go back to Princeton.
Re. "asset purchases"
It is unclear what assets he had in mind, probably 10 year T-bonds since the Feds cannot legally buy, say, private company shares.
It is pretty clear though that he does not have much of an idea what another $trl or so of long-term T-bonds purchase would entail.
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