Felix Salmon Shakes His Head at Ben Stein
The Dollar and Its Implications: Project Syndicate

Mark Thoma Interprets William Poole

Mark Thoma turns Fed bank president William Poole's speech into a pretend interview:

Economist's View: Market Bailouts and the "Fed Put":

Thoma: Some people aren't going to make it to the end of this discussion. Any chance you could give a summary of the bottom line?

Poole: I can state my conclusion compactly: There is a sense in which a Fed put does exist. However, those who believe that the Fed put reflects unwise monetary policy misunderstand the responsibilities of a central bank. The basic argument is very simple: A monetary policy that stabilizes the price level and the real economy cannot create moral hazard because there is no hazard, moral or otherwise. Nor does monetary policy action designed to prevent a financial upset from cascading into financial crisis create moral hazard. Finally, the notion that the Fed responds to stock market declines per se, independent of the relationship of such declines to achievement of the Fed’s dual mandate in the Federal Reserve Act, is not supported by evidence from decades of monetary history.

Very much worth reading.

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