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« Selgin on Bubbles, Busts, and Bad Dichotomies | Main | Ronald Coase and Comparative Institutional Analysis »


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On "the big challenge upon ending QE will be the problem noted above: how to avoid inflation as the economy restarts"

Doesn't the fed have enough tools in its armory to prevent inflation ? For example use OMO to sell back some of the assets its has purchased, or just increase IOR ? In any case ,as MMTers are fond of pointing out ,under interest-rate targeting the amount of reserves in the system are never a constraint on lending - if reserves didn't exists when banks spot lending opportunities the fed will create them - so the huge pool of reserves may be something of a red herring as far as inflation fears go.

On "Wrapping up quantitative easing in 2014 is long overdue": At a time when weak expectations about future aggregate demand are probably one of biggest drags on the economy won't ending QE (even given its limited effectiveness) further weaken those expectations and slow down growth ? Until those expectations have improved should the fed rather be looking to expand such programs (as well as looking at more "route one" approaches such as "helicopter drop" type policies ?

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