Sunday, October 23, 2011

Nominal GDP Targeting: Limited by how many trillions of stuff the Fed Govt. can buy?

I get from this Delong post

that he's not certain if the Fed can buy enough trillions of dollars of stuff to adjust US GDP to where it should be. He thought 3 trillion would be more than enough, but apparently the Fed has $3 trillion in assets its bought since the recession began in 2008 and it hasn't been enough to get us to nominal gdp.

I'm not smart enough to take this anyplace, so its more a regurgitation of his post for my own autodidactic purposes.

1 comment:

  1. I was going to go to a post from Nick Rowe where he says how easy it is for a central bank to do this that it barely has to do anything, but then I found a newer post where he responds to Delong by expressing skepticism. He pities us our lack of monarchy.

    By the time the Fed starts buying up assets like cash is going out of style, people will raise the prices in expectation of the Fed buying them. But people don't believe the Fed is willing to do it, with a number of Fed chairs publicly dissenting about the Fed risking inflation.