Last October, the Federal Reserve relaunched quantitative easing. Of course, Fed Chairman Jerome Powell insists it’s not quantitative easing. But as Peter Schiff pointed out in a recent tweet, that debate is really just semantics.
The argument over whether the current Fed balance sheet expansion constitutes QE is pointless. QE was always just a euphemism for debt monetization. The Fed monetized debt in the past, its monetizing more debt in the present, and it will monetize even more debt in the future!”
A paper by Scott A. Wolla and Kaitlyn Frerking for the Federal Reserve Bank of St. Louis warns that the Fed’s own policy could lead to “economic ruin.”
The paper titled “Making Sense of National Debt” explains the pros and cons of national borrowing in typical Keynesian fashion. In a nutshell, a little debt is a good thing, but too much debt can become a problem.
But in the process of explaining national debt, Wolla and Frerking stumble into an ugly truth — Federal Reserve money printing can destroy a country’s economy.
Was Ben Bernanke lying or just wildly mistaken when he claimed the Federal Reserve wasn’t monetizing the debt in the early days of the financial crisis?
The Fed released the minutes from its January Federal Open Market Committee meeting yesterday. There really weren’t any surprises. The minutes emphasized the central bank will exercise “patience” in raising rates and also signaled that its balance sheet reduction program will end soon. A number of figures at the Fed have hinted that quantitative tightening will end in the near future, including Federal Reserve Governor Lael Brainard and Cleveland Fed President Loretta Mester.