Tuesday, December 16, 2008

Reaction to today's Fed meeting:

At the blog But Then What:
Well you can kiss the Fed Funds rate goodbye as a tool of monetary policy. In case you haven’t heard, the Fed announced that its new target rate was 0% to 0.25%. Why they didn’t just say zero is beyond me but I’m sure there is an obscure reason.

So now clear the boards for quantitative easing or to put it another way the Great Experiment. Remember, we are in the realm of theory now. I’m sure this is very exciting to those who have been writing papers about all of this for the past 30 years but personally I’m a little worried. I hope they know what they’re doing but experiments rarely go well the first time.


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