The Fed & QE3+ explained: new AEI Economic Outlook

"QE3+ is an operation analogous to walking a tightrope over Niagara Falls. Success will be exhilarating, but failure will be ugly" – John Makin, AEI

In his September Economic Outlook, American Enterprise Institute (AEI) economist John Makin explains how the Federal Reserve's latest round of quantitative easing (what he terms QE3+) is supposed to work, and what could go awry.

He explains:

  • Risking Inflation: The Federal Reserve's recently announced QE3+ measures to encourage economic growth and reduce unemployment demonstrate a dedication to looser monetary policy, a risky approach that could bring higher inflation.
  •  
  • Indefinite Commitment: With QE3+, The Fed is committing to low interest rates and additional purchases of mortgage-backed securities indefinitely, until the labor market improves.
  •  
  • Path to Success: To be successful in this approach the Fed will have to monitor inflation expectations so as to not permanently boost inflation expectations.

You may also be interested in John Makin's reaction to the FOMC statement, which can be found here.

John Makin is a long-time Fed watcher with experience in academia, financial markets, and policy advising. He has advised the US Treasury, the Congressional Budget Office, and the International Monetary Fund. He is available for interviews and can be reached at [email protected] or through [email protected] (202.862.5883).

For additional help, other media inquiries, or to reserve AEI's in-house TV studio or ISDN facilities, please contact:

TV Jesse Blumenthal [email protected] / 202.862.4870

Radio Michael Pratt [email protected] / 202.862.5823

Print or Web Jesse Blumenthal [email protected] / 202.862.4870, Michael Pratt at [email protected] / 202.862.5823, or Veronique Rodman at [email protected] / 202.862.4871

Follow @AEInews

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

John H.
Makin

What's new on AEI

AEI Election Watch 2014: What will happen and why it matters
image A nation divided by marriage
image Teaching reform
image Socialist party pushing $20 minimum wage defends $13-an-hour job listing
AEI on Facebook
Events Calendar
  • 27
    MON
  • 28
    TUE
  • 29
    WED
  • 30
    THU
  • 31
    FRI
Monday, October 27, 2014 | 10:00 a.m. – 11:30 a.m.
State income taxes and the Supreme Court: Maryland Comptroller v. Wynne

Please join AEI for a panel discussion exploring these and other questions about this crucial case.

Tuesday, October 28, 2014 | 9:30 a.m. – 12:15 p.m.
For richer, for poorer: How family structures economic success in America

Join Lerman, Wilcox, and a group of distinguished scholars and commentators for the release of Lerman and Wilcox’s report, which examines the relationships among and policy implications of marriage, family structure, and economic success in America.

Tuesday, October 28, 2014 | 5:30 p.m. – 7:00 p.m.
The 7 deadly virtues: 18 conservative writers on why the virtuous life is funny as hell

Please join AEI for a book forum moderated by Last and featuring five of these leading conservative voices. By the time the forum is over, attendees may be on their way to discovering an entirely different — and better — moral universe.

Thursday, October 30, 2014 | 2:00 p.m. – 3:00 p.m.
A nuclear deal with Iran? Weighing the possibilities

Join us, as experts discuss their predictions for whether the United States will strike a nuclear deal with Iran ahead of the November 24 deadline, and the repercussions of the possible outcomes.

Thursday, October 30, 2014 | 5:00 p.m. – 6:15 p.m.
The forgotten depression — 1921: The crash that cured itself

Please join Author James Grant and AEI senior economists for a discussion about Grant's book, "The Forgotten Depression: 1921: The Crash That Cured Itself" (Simon & Schuster, 2014).

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.