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Lowering interest rates is how the fed prints money. The issue at hand (well, the US economy might be beyond this point now but go back a year or three) is that
by harryh 12y ago
Lowering interest rates is how the fed prints money. The issue at hand (well, the US economy might be beyond this point now but go back a year or three) is that you can't lower rates below zero. Certainly (as you hint at) the government can also implement fiscal policies in addition to the Fed's monetary policies but few people believe that fiscal policies can be effective on their own.
You are certainly right that if the fed goes too far asset prices can inflate too heavily. As with many things in life finding an appropriate balance can be tricky!
- pjc50 12y agoThe treasury can mint money as well - remember the "trillion-dollar platinum coin" silliness of a few years ago?
- harryh 12y agoSure, but it has to get into the hands of the public somehow.
- pjc50 12y agoThrow the trillion-dollar coin out of the President's helicopter. More seriously, there is a huge number of useful things it could be spent on that would free up cash for consumer spending and investment. It's just that too many people in public life regard other people's poverty as "morally improving".
- harryh 12y agoIndeed as I said before: "Certainly (as you hint at) the government can also implement fiscal policies in addition to the Fed's monetary policies but few people believe that fiscal policies can be effective on their own."