Thursday, April 2, 2009

Monetary policy & where the rubber meets the road

At this link you can check out a primer on Quantitative Easing. Quanti-what, you might ask. This is one of the more unusual tools that a central bank like the Fed can use when interest rates are already very low. Don't wory, the primer is a video with talking and graphics, no reading required. Just sit back and enjoy.

I wouldn't say that using QE means were in 'duck and cover' mode, but we certainly have crossed over into 'spare tire' territory.

Let's just hope it is a full size spare and not one of those bizarre miniature spare tires that seem to be the norm. It's bad enough when you are on the side of the road changing a flat that cars pass by at such incredible rates of speed you feel like you are part of a nascar pit crew, only you are wearing a tie and shoes that hurt your feet; but then when you get back in your car and on the road again, everyone can still tell you just had a flat because of the dinky spare that is causing your car to pull dangerously to one side. I mean, sure, you can white-knuckle it for a few miles, but at some point you consider lashing your hands to the wheel like some 19th century sailor at the helm of a ship headed straight into the gaping jaws of a storm at sea.

Anyway, those little spare tires are the automotive equivalent of a scarlett letter.

As an added bonus the QE video narrator has an English accent. I personally believe everything sounds better with an English accent. That is why I feel strongly that all announcements about the future national debt should be made by the actor Michael Caine, or if he is not available, the Geico lizard.
h/t on the QE primer to Mankiw. All the rambling about spare tires and English accents is mine.

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