Quantitative Easing: Theory Need Not Apply
By John M. Mason:
At the top of my Financial Times this morning reads the blurb: “Did Ben Bernanke Drop the Ball Over QE3?” This is reference to an editorial by Clive Cook.
In examining the speech given by Fed Chairman Bernanke, Cook takes on the Financial Times essays published last week by Michael Woodford and Mohamed El-Erian that argued against the Fed implementing a QE3. Cook contends that Bernanke missed a “chance to jolt ailing America.”
I don’t believe that Bernanke dropped the ball. I don’t believe that a declared QE3 is necessary. Whereas Cook believes that a QE3 would “shock” America, I believe that a QE3 would be taken as ho-hum, more of the same.
In this, I don’t believe that QE1 and QE2 were understood.
Woodford, the “good” academic, states in his essay: “The economic theory behind QE has always been flimsy.”
QE1 and QE2 were not a result of economicComplete Story »