Implied Dissent

Wednesday, January 27, 2010

What's Holding Us Back

I know it's not the most exciting topic, but it's vitally important. The Federal Reserve's policy of paying interest on banks' reserves has been killing the economy. Yglesias hits the nail right on the head. Fortunately we are probably at the point now in the cycle where it's not going to be a major problem, merely holding us back from the strong growth snapback we should be experiencing. This would be easier to see if we had a good objective indicator of the stance of monetary policy (perhaps Sumner's NGDP futures market?)



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