Note: This post first appeared on Patreon on 2 Jul 2018
I saw a Twitter exchange this morning that reminded me that the Fed is facing a political crisis due to its quantitative easing program. And I think this will limit the Fed's ability to act in the next recession. That adds to the loss of fiscal and monetary policy space I mentioned last week. But since this is 'political', I am going to make my explanation brief.
Excess reserves mean you have to pay interest to banks
Here's the tweet and response.
The Fed thought it could wait until next year to decide key questions that will shape how large a bond portfolio it maintains.
The market may be forcing those discussions sooner: https://t.co/Va7Lta1mnN
— Nick Timiraos (@NickTimiraos) July 1, 2018
Important story! Highlights t...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.