By now you should have seen my post indicating I believe the Fed has already begun its third easing campaign. What the Fed has done is told us it would keep the Fed Funds rate at effectively zero percent through mid-2013, two years from now. This is one step short of ‘rate easing’, the term I am using to describe a Central Bank’s targeting a specific non-policy rate, a form of quantitative easing where the Fed targets price instead of quantity.
While rate easing and its cousin permanent zero might have some salutary effect in the short term, these policies are toxic to the financial sector and consumption demand. Likely, they will not spur the economy but lead to a deepening malaise.
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