Since the blogosphere has matured to some extent, I always wonder whether reposting other posts without commentary does much good. I assume you all read Paul Krugman, after all. Still, sometimes I can't keep up with everything in detail so when I see a couple people repost it focuses my attention on the important posts.
This is Krugman on the Fed, and I thought this was a good thought:
"It certainly sounds as if Bernanke is reacting to the Woodford critique,
which argues that quantitative easing is mainly effective through its
effect on expectations. While the policy does take the form of purchases
of unconventional assets — mortgage-backed securities — Bernanke is not
relying on portfolio balance effects alone; instead, he’s trying to
move expectations by declaring that the Fed will continue to ease for some time after the economy has begun to recover...
...it’s kind of vague. No clear target, whether nominal GDP or some
kind of inflation/unemployment mix. Put it this way: you could imagine a
future Fed chairman tightening policy in line with the same Taylor rule
that seemed to describe policy before the crisis — a rule that suggests
that interest rates wouldn’t start to go up until unemployment was
below, say, 7 percent — and still being able to claim that he had not
violated any promise Bernanke made. In other words, it’s not totally
clear that we really do have a shift in future policy. And since the
whole point is to move expectations, leaving this kind of wiggle room is
not a good thing.
To paraphrase an old joke: what do you get when
you cross a Godfather with a central banker? Someone who makes you an
offer you can’t understand."