 Jun 23rd 2013, 01:49 A Cost Of Quantitative Easing That Never Gets Articulated
Unstable Markets! Distorting Decisions Credit analyst Doug Noland on the costs of the Federal Reserve's aggressive monetary easing .. for years there has been debate of costs & the benefits, but no one mentions costs other than threat of inflation & dollar devaluation .. "The supposed benefits have been easy to articulate: lower market yields and mortgage rates, higher stock and asset prices and additional stimulus for a weak economic recovery. The costs of monetary inflation have always been more challenging to explain – only much more so in recent years. Opponents of quantitative easing, in particular, have focused on the threat of inflation and dollar devaluation. It has been difficult for this camp to sway public opinion, especially with securities markets at record levels and CPI relatively contained. The lurking cost of unstable financial markets hasn't been part of the discourse, although this issue jumped into the limelight this week. I've been arguing that the greatest risks associated with Fed and global central bank inflationary policymaking have been in the realm of asset inflation, dangerous Bubble dynamics and ongoing global financial distortions and economic maladjustment. This type of analysis is so removed from conventional thinking that it resonates with few and basically has no impact on the broader discussion. This is a curious dynamic, especially since I believe strongly in the value of the analysis and analytical framework."John Hussman has been saying much the same, but in a different way. |  |
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