Feel Free Read The Menace of Fiscal QE DOC
“A fascinating critical overview of an idea that is gaining traction left, right, and center.” —Peter Conti-Brown, author of The Power and Independence of the Federal ReserveAs the Federal Reserve struggles to fulfill its mandate in a low interest rate world, it faces another challenge: new threats to its hard-won independence.Thanks to crisis-era changes to its procedures, the Fed now enjoys practically unlimited powers of quantitative easing (QE): it can buy all the assets it likes while still controlling inflation. So far, QE has only been used to combat recession. But if certain politicians have their way, the Fed may end up using it not for macroeconomic purposes but to finance backdoor spending. That’s The Menace of Fiscal QE.In his brief but systematic study, George Selgin reviews the fiscal QE movement, shows how it threatens both the Fed’s independence and democratic control of government spending, and counters claims that it offers a low-cost way to finance such spending. Finally, he proposes a way to rule-out fiscal QE without limiting the Fed’s ability to counter slumps.
