Quantitative Easing and Market Distortions
In yesterday’s post , I noted that members of the Federal Open Market Committee are starting to discuss the Fed’s latest quantitative easing, in particular the size and duration of a program that includes purchases of Treasury securities and mortgage-backed securities. What really needs to be asked is 1) whether this policy is distorting the market rate of interest (which, if it is, will distort investment decisions and set the economy on the path to bigger…
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