Here are some excerpts:
The Financial Times of March 25, 2002 ran an article titled “Fed Considered Emergency Measures to Save Economy”. The paper reported: The US Federal Reserve in January considered a variety of “unconventional” emergency measures to be taken if cutting short-term interest rates failed to arrest a US recession and prevent Japanese-style deflation. One of those steps may have been a plan to buy US stocks.
According to the reporter, an unnamed source was quoted as
follows: the Fed “could theoretically buy anything to pump money into the system” including “state and local debt, real estate and gold mines — any asset”.
These “unconventional measures” all have two things in common: one, that they are more inflationary than the conventional central bank policies; two, that they are among the most absurd, bizarre, and preposterous monetary crank schemes ever proposed by anyone calling themselves an economist. Not to mention that some of these plans are illegal (according to existing Fed regulations), though who doubts that, in a crisis, this would be ignored?
BERNANKEISM: FRAUD OR MENACE?
Setting aside the legal and technical issues, another question remains: Do they really mean it? Or is this just a lot of musings by academic economists with time on their hands? Too many boys with toys? Is Bernankeism a serious plan? Or is it an orchestrated propaganda campaign?
I have no doubt that the authors of the Fed studies would like to implement their plans, if the conditions played out the way that their theories describe. But how likely is it that the United States will see a long cash-building deflation, slowly falling consumer prices, and nominal interest rates near zero? Not
very!
Check it out.
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