Yes, and when the proactive fiscal package kicks in next month adding to the already reasonably large deficit (from falling tax revenues and rising transfer payments) and starts driving up prices from liquidation levels, monetary policy will get the blame. Just like Greenspan’s getting blamed for the housing bubble that followed the 2003 fiscal adjustment and subsequent GDP growth.
Fed Balance Sheet Explodes
by Brian Wesbury and Robert Stein
Mar 18 (First Trust) — The Federal Reserve today went into overdrive in its attack on the US recession and financial system crisis.
We are definitely fearful of the long-term consequences of massively easy monetary policy, which today’s policy statement clearly signals. The US does not face a deflation problem, as February reports on producer and consumer prices revealed. As a result, easy money will become even more problematic than conventional wisdom believes or understands.
[top]