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> it isn't clear what it means if anything What it indicates is what the Fed knows and has already signaled: monetary policy is going to be largely ineffectual
by rebelos 5y ago
> it isn't clear what it means if anything
What it indicates is what the Fed knows and has already signaled: monetary policy is going to be largely ineffectual in the near term.
- JumpCrisscross 5y ago> monetary policy is going to be largely ineffectual in the near term The failure mode you're alluding to is a Keynesian liquidity trap [1], a sibling to stagflation (inflation and demand failure): deflation and demand failure. The American economy shows no failure of aggregate demand. (Quite the opposite.) Inflation expectations are rising. And these reverse repo data shows banks relinquishing liquidity, not hoarding it. More pointedly, this increase resulted from the FOMC increasing reverse repo rates. That's monetary policy causing intended effects. [1] https://en.wikipedia.org/wiki/Liquidity_trap https://en.wikipedia.org/wiki/Liquidity_trap