Monetary morphs into fiscal: the Fed's great adventure

Authors

  • Anthony F. Herbst Emeritus professor, University of Texas at El Paso

DOI:

https://doi.org/10.17811/ebl.4.2.2015.79-86

Abstract

Post 2008 US economic policy has centered on Quantitative Easing, QE. The expectation, or ostensible hope, was that injections of money would stimulate economic recovery and growth in the real sector. However, seven years later, the economy languishes. Monetary measures have not brought recovery to the real sector. It has generally escaped notice, but QE has had the effect of a tax increase on savers, retirees, and those with fixed or inelastic wages. Absent prospects for profitable investment in plant and equipment, industry will not invest even with historically low interest rates. Those who might save if interest returns rewarded it have incentive to spend and to borrow instead, but have not done enough to launch recovery.

Author Biography

Anthony F. Herbst, Emeritus professor, University of Texas at El Paso

Economics and Finance

Professor Emeritus

 

References

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<http://s3.documentcloud.org/documents/1375316/bill-gross-investment-outlook-dec-2014-exp-12-30.pdf>

Herbst, A.F., et al., “Quantitative Easing in An Open Economy—Not a Liquidity But a Reserve Trap,” Global Finance Journal (2014), <http://dx.doi.org/10.1016/j.gfj.2014.03.004>

Ibbotson Associates, SBBI Yearbook, 2004.

U.S. Bureau of Labor Statistics, Labor Force Participation Rate, Series LNS11300000, Web Databases, Tables & Calculators by Subject

Zero Hedge, “First Of Many: Standard Chartered Hit By Billions In Losses From Commodity Crash,“ Zero Hedge January 13, 2015. <http://www.zerohedge.com/news/2015-01-13/first-many-standard-chartered-hit-billions-losses-commodity-crash>

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Published

30-06-2015

How to Cite

Herbst, A. F. (2015). Monetary morphs into fiscal: the Fed’s great adventure. Economics and Business Letters, 4(2), 79–86. https://doi.org/10.17811/ebl.4.2.2015.79-86

Issue

Section

Policy Watch