Tuesday, November 23, 2010
Martin Feldstein on QEII.
I have been thinking lately that QEII will just do what has already been done...generate another asset price/commodity bubble. If that is the case, then once again the Fed has become the problem and not the solution. I suppose a policy maker always wants to be seen to be doing something in times of crisis. But doing something is not always better than doing nothing, especially if it induces greater instability. And as Charles Calomiris pointed out last week, we are in recovery and not in crisis mode. Is $1 trillion really worth 20 basis points in the 10-year Treasury rate and a huge risk for a redux of That 70s Show?