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Special Report on

Has Quantitative Easing Worked?

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Owen Humpage is a senior economic advisor specializing in international economics in the Research Department of the Federal Reserve Bank of Cleveland. His recent research has focused on central-bank interventions in exchange markets, dollarization in Latin America, and the sustainability of current-account deficits. Read full bio Research Assistant Michael Shenk is a research assistant in the Research Department of the Federal Reserve Bank of Cleveland. His work focuses on international topics and housing-market indicators. Read full bio 12.10.08 Owen F. Humpage and Michael Shenk The Federal Open Market Committee has lowered its ...
The practices and regulation of production, issue and redemption of money are of central concern to monetary economics (e.g. money supply , monetarism ), and affect the operation of financial markets and the purchasing power of money. Central banks measure the money supply, which shows the amount of money in existence at a given time. An unknown portion of the new money created is indicated by comparing these measurements on various dates. For example in the US, one of the various money supply measurements, called M2, grew from $286.6bn in January 1959 to $8,327bn in May 2009. The destruction of currency may occur when coins are ...
Markets and Economy: Inflation or Deflation, Thin Markets, Lumber ...
– James Saft – If you are trying to decide whether to fret about inflation or deflation, don’t bother: you may just get both.  Yes, in the spirit of these austere times, it is a two for one offer; deflation comes first, followed by an almighty inflation after central banks press the “go nuclear” button on the quantitative easing machine. – Reuters Blogs   ———— The Tyranny of the Illiquidity Providers – By Paul Kedrosky – … The liquidity landscape has been transformed. We have higher peaks and lower valleys, toggling between infinity and zero, both states which ... market research, surveys and trends
The Baltimore Reporter
“The economy is still in the gravitational pull of the Great Recession,” said Robert Reich, former US labour secretary. “All the booster rockets for getting us beyond it are failing.” * Monetary union has left half of Europe trapped in depression * Asia needs to fully wake up to the scale of the West’s economic crisis * Buy-to-let: rents rise for first time in three months * Eurozone falls into deflation as M3 money supply shrinks * Wages fall at fastest rate since records began * Deflation: workers face more pay freezes as prices fall at sharpest rate since 1933 “Home sales are down. Retail ... market research, surveys and trends


Bank of England Cuts Rates, Starts Asset Purchases (Update7 ...
March 5 (Bloomberg) -- Bank of England Governor Mervyn King will take the unprecedented step of printing money to buy assets after reducing the benchmark interest rate by a half point to almost zero. The bank said it will pump cash into the economy by purchasing as much as 150 billion pounds ($211 billion) in government and corporate bonds, sparking a rally across the debt market. It also cut its key rate to a record low of 0.5 percent. Separately, the European Central Bank reduced its own benchmark to 1.5 percent and signaled it may cut further in coming months. Europe’s major central banks are adopting different speeds as they ... industry trends, business articles and survey research
[ The Financial Ninja ]: Japan Stuck, Quantitative Easing in the US
The Japanese are still stuck in ZIRP… in the same liquidity trap… and still alternating between mild inflation and mild deflation. Bank of Japan Cuts Rate to 0.3% to Fend Off Prolonged Recession: “The Bank of Japan cut its benchmark interest rate to 0.3 percent to help stave off a prolonged recession. Governor Masaaki Shirakawa cast the deciding vote to lower the key overnight lending rate from 0.5 percent after four of the eight board members dissented, the central bank said in Tokyo today. Three wanted to cut the rate to 0.25 percent, and one voted to leave it unchanged, Shirakawa said. Shirakawa, 59, came ... industry trends, business articles and survey research
Financial markets are always crying wolf
Is the recovery safe, or is the economy heading back down again? The good news from the latest update to the International Monetary Fund's World Economic Outlook is that the organisation's growth forecasts are still being revised upwards, though not for the UK, which is subject to a smallish downgrade for next year to take account of the fiscal squeeze about to be imposed by the Government. But globally, things have improved a lot over the past year. The latest forecast is for 4.6 per cent growth in 2010, against a projection of just 2.5 per cent a year ago. So far, so reassuring. The optimism I and others expressed ... market trends, news research and surveys resources
Is now the time to experiment with negative interest rates?
There is a magic monetary wand out there which could accelerate economies along the road to prosperity out of the widespread destruction wrought by the global credit bubble. This wand is not the creation of another monetary time-bomb labelled “ quantitative easing ”; rather the source of magic is an emergency conversion of banknotes. Under the heyday of the international gold standard (1870-1914) the immediate slump in demand caused wages and prices to fall to a lower level, but there was a widespread expectation that wages and prices would re-bound over the long-run in line with the monetary stability assured by the gold ... market trends, news research and surveys resources


Monetary Policy Alternatives at the Zero Bound: An Empirical ...
Sep 9, 2004 ... has been eliminated; and (2) the BOJ's quantitative easing ..... does not explain the mechanism by which quantitative easing worked in ... technology research, surveys study and trend statistics
FRB: Speech--Bernanke, The Crisis and the Policy Response--January ...
For almost a year and a half the global financial system has been under extraordinary stress--stress that has now decisively spilled over to the global economy more broadly.  The proximate cause of the crisis was the turn of the housing cycle in the United States and the associated rise in delinquencies on subprime mortgages, which imposed substantial losses on many financial institutions and shook investor confidence in credit markets.  However, although the subprime debacle triggered the crisis, the developments in the U.S. mortgage market were only one aspect of a much larger and more encompassing credit boom whose ... technology research, surveys study and trend statistics
Thinking about the liquidity trap
We live in the Age of the Central Banker - an era in which Greenspan, Duisenberg, and Hayami are household words, in which monetary policy is generally believed to be so effective that it cannot safely be left in the hands of politicians who might use it to their advantage. Through much of the world, quasi-independent central banks are now entrusted with the job of steering economies between the rocks of inflation and the whirlpool of deflation. Their judgement is often questioned, but their power is not. It is therefore ironic as well as unnerving that precisely at this moment, when we have all become sort-of ...
What are the signs of recession recovery? Which countries are ...
You might want to watch indicators that tend to lead or are coincident to inflection points of economic cycles, e.g. shrinking output gap, increasing capacity utilization, increase in average weekly hours worked (this leads resumption of hiring), expansion of outstanding credit in the private sector, increasing level of new orders in manufacturing. posted 7 months ago I think some of the countries that are recovering are Australia, China, and New Zealand. Australia has the highest Interest Rate of 3.5% out of all the G-10 Central Banks. Australia it appears has escaped this global recession relatively unscathed, and with ...
How can the Fed Destroy Money It Created? | Ask MetaFilter
[MonetaryPolicyFilter] In relation to the Fed's huge injection of money yesterday, please explain to me how, if at all, the Federal Reserve can destroy money on its balance sheet in a way that offsets the inflation that normally would result. The Fed's announcement yesterday that is it going to flood the economy with dollars would, in normal circumstances, be horrifically inflationary. But these are not normal normal circumstances. My questions are: 1) Why isn't this inflationary? To what extent have deflationary factors stemming from the credit crisis not yet worked their way into the economy such that they ...