The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

Ruh-Roh: Fed to End QE2?

Posted on | February 8, 2011 | 13 Comments

How will markets react to the end of “quantitative easing”?

Today, Dallas Fed President Richard Fisher . . . said that he will not support any further QE expansion beyond the current $600 Billion Treasury buying program which is set to expire in June.

The era of fiscal stimulus is over and now, if the end of monetary stimulus is truly in sight, then we’ve finally reached the end of the neo-Keynesian route. And it’s about damned time, as Daniel Indiviglio says:

If the labor market is still failing to add enough jobs to bring down the unemployment rate, then that’s a pretty clear verdict that the second round of quantitative easing didn’t do the trick. If that’s the case, then you have to ask when the Fed would admit that its efforts to expand credit again and again are failing to create jobs.

What has been proven in the past two years is something we ought to have learned from the “stagflation” of the 1970s: Keynes was wrong!

Category: Economics

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