Tuesday, November 4, 2008

Helicopter Ben and the Economic Stimulus

Here are some interesting money supply comments from the Fed Chief. Apparently, he has no reticence to move the fed funds rate to zero, and has more tricks up his sleeve after that. (This is from a speech given in 2002.)
"As I have mentioned, some observers have concluded that when the central bank's policy rate falls to zero--its practical minimum--monetary policy loses its ability to further stimulate aggregate demand and the economy. At a broad conceptual level, and in my view in practice as well, this conclusion is clearly mistaken."

"But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost."
And they can drop those dollars to folks using helicopters.

1 comment:

  1. Can you say inflaTION (say it cajun style!!!)

    ReplyDelete