{"id":11256,"date":"2015-08-20T08:07:35","date_gmt":"2015-08-20T13:07:35","guid":{"rendered":"http:\/\/olduvai.ca\/?p=11256"},"modified":"2015-08-20T08:07:35","modified_gmt":"2015-08-20T13:07:35","slug":"the-federal-reserve-which-created-quantitative-easing-admits-qe-doesnt-work","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=11256","title":{"rendered":"The Federal Reserve \u2013 Which CREATED Quantitative Easing \u2013 Admits QE Doesn\u2019t Work"},"content":{"rendered":"<h3 class=\"entry-title\"><a href=\"http:\/\/www.washingtonsblog.com\/2015\/08\/the-federal-reserve-which-created-quantitative-easing-admits-qe-doesnt-work.html\" target=\"_blank\">The Federal Reserve \u2013 Which CREATED Quantitative Easing \u2013 Admits QE Doesn\u2019t Work<\/a><\/h3>\n<p><strong>Even the Fed Admits QE Doesn\u2019t Work<\/strong><\/p>\n<p>The Vice President of the Federal Reserve Bank of St Louis (Stephen Williamson)\u00a0\u00a0<a title=\"writes\" href=\"http:\/\/www.scribd.com\/doc\/275145522\/St-Louis-Fed-Qe-Study\" target=\"_blank\">writes<\/a>\u00a0in a new Fed white paper (as explained by\u00a0<a title=\"Zero Hedge\" href=\"http:\/\/www.zerohedge.com\/news\/2015-08-19\/after-6-years-qe-and-45-trillion-balance-sheet-st-louis-fed-admits-qe-was-mistake\" target=\"_blank\">Zero Hedge<\/a>):<\/p>\n<ul>\n<li>The theory behind Quantitative Easing (QE) is \u201cnot well-developed\u201d<\/li>\n<\/ul>\n<ul>\n<li>The evidence in support of Ben Bernanke\u2019s views on the transmission mechanisms whereby asset purchases affect outcomes are \u201cmixed at best\u201d<\/li>\n<\/ul>\n<ul>\n<li>\u201cAll of [the] research is problematic,\u201d Williamson continues, as \u201cthere is no way to determine whether asset prices move in response to a QE announcement simply because of a signalling effect, whereby QE matters not because of the direct effects of the asset swaps, but because it provides information about future central bank actions with respect to the policy interest rate.\u201d In other words, it could be that the market is just reading QE as a signal that rates will stay lower for longer and that read is what drives market behavior, not the actual bond purchases.<\/li>\n<\/ul>\n<ul>\n<li><strong>\u201cThere is no work, to my knowledge, that establishes a link from QE to the ultimate goals of the Fed inflation and real economic activity. Indeed, casual evidence suggests that QE has been ineffective in increasing inflation.<\/strong>\u00a0[<a title=\"Background\" href=\"http:\/\/www.washingtonsblog.com\/2015\/01\/qe-failed-spark-inflation.html\">Background<\/a>.] For example, in spite of massive central bank asset purchases in the U.S., the Fed is currently falling short of its 2% inflation target. Further, Switzerland and Japan, which have balance sheets that are much larger than that of the U.S., relative to GDP, have been experiencing very low inflation or deflation.\u201d<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Federal Reserve \u2013 Which CREATED Quantitative Easing \u2013 Admits QE Doesn\u2019t Work Even the Fed Admits QE Doesn\u2019t Work The Vice President of the Federal Reserve Bank of St Louis (Stephen Williamson)\u00a0\u00a0writes\u00a0in a new Fed white paper (as explained by\u00a0Zero Hedge): The theory behind Quantitative Easing (QE) is \u201cnot well-developed\u201d The evidence in support [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[7557,68,122,303,8288,305,353,426,1154,452,661,662,8287,775,5510],"class_list":["post-11256","post","type-post","status-publish","format-standard","hentry","category-economics","tag-asset-purchases","tag-ben-bernanke","tag-central-bank","tag-fed","tag-fed-white-paper","tag-federal-reserve","tag-gdp","tag-inflation","tag-interest-rate-policy","tag-japan","tag-qe","tag-quantitative-easing","tag-stephen-williamson","tag-switzerland","tag-washingtons-blog"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11256","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11256"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11256\/revisions"}],"predecessor-version":[{"id":11257,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11256\/revisions\/11257"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11256"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11256"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11256"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}