08 March, 2012

Bernanke Needs Some Bounce in His Tail: Stevenson and Wolfers - Bloomberg

Bernanke Needs Some Bounce in His Tail: Stevenson and Wolfers - Bloomberg: Eeyore’s message is so sobering that it mutes the desired stimulus effect of the low interest rates. After all, why would you buy anything, or invest in producing it, if you have just learned that some of the smartest forecasters in the country think the economic outlook is so awful that they dare not raise rates until 2014?
Terrific Party

Chairman Tigger has a totally different approach. He figures that the prospect of a terrific party will revive everyone’s animal spirits. He also knows what folks are thinking: Every time the economy gets going, the Fed spoils the party by taking away the punch bowl -- that is, by raising interest rates to keep inflation in check. So Tigger gives a speech promising to keep interest rates low for several years -- even when the economy recovers