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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (11892)	9/16/2004 8:59:34 PM
From: CalculatedRisk	Respond to of 116555

I read some of that FED study. That article doesn't do it justice. federalreserve.gov Much of the article is mental masturbation. The real point of the study is to address what can be done in a ZIRP environment (Zero Interest Rate Policy). Once again the FED is concerned about deflation and Ben S. Bernanke argues for more inflation. EXCERPT: Despite our evidence that alternative policy measures have some effect, we remain cautious about relying on such approaches. We believe that our findings go some way to refuting the strong hypothesis that nonstandard policy actions, including quantitative easing and targeted asset purchases, cannot be successful in a modern industrial economy. However, the effects of such policies remain quantitatively quite uncertain. Thus we believe that policymakers should continue to maintain an inflation buffer and to act preemptively against emerging deflationary risks (Reifschneider and Williams, 2000). There are tradeoffs, of course, in that erring toward the side of ease when rates are low tends to create an inflation bias; but the goal of zero inflation seems unwise in any case, and a systematic tendency to err toward an easier policy when adverse shocks bulk large and nominal interest rates are low can be offset by a willingness to unwind that accommodation quickly once the situation clears.

To: mishedlo who wrote (11892)	9/17/2004 9:08:31 AM
From: Knighty Tin	Read Replies (1) \| Respond to of 116555

mish, Very simple. They are calling the game a victory when they haven't finished the first quarter. The massive debt creation that kept us from having a wingding of a recession is still sitting on the barstool and snarling at the American economy like a 1000 pound gorilla.