Karl Smith is encouraged.
This is the minority view.
David Beckworth feels a bit let down.
Krugman is either damning the speech with faint praise, or praising it with faint damnation.
Delong minces no words: “This is very bad”
What we seem most likely to get is QE2. James Hamilton calculates that $800 Billion of it will get us 13 basis points on long bonds. Why bother? (Same vid I linked to yesterday.)
I see no reason for optimism.
UPDATE:
This post is a revised version of a comment I left at MB. I guess Karl felt goaded, since he then posted this. I'm actually a bit flattered that he felt the necessity to respond. He's added several follow-ups, including this one.I remain sceptical. What do you think?
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1 comment:
QE at the zero bounds is an exercise in bumping up bank balance books, since the money simply makes one circuit from Fed bond purchase to Fed deposits. Corporations right now are sitting on trillions in cash that they refuse to spend because, well, there's no demand to justify spending. The people the Fed is buying bonds from aren't spending the money, they're depositing it... and the banks are depositing it right back into the Fed. What good does that do?!
- Badtux the Circulatory Penguin
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