"If money isn't loosened up, this sucker could go down" - George W. Bush warned in September 2008

Tuesday, August 10, 2010

Good news from the Fed

While the Fed did not implement any of our favourite proposals, the Fed eased monetary policy by stopping the exit strategy and reinvesting principal payments from agencies in longer-term Treasuries. The direct benefits of such QE-lite are minor. However, the good news is that this action by the Fed should be interpreted as a signal that further easing will be forthcoming if adverse economic developments continue.

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The Money Demand