Who Is the Pain-Austerity Caucus at the Federal Reserve Talking to?
Martin Wolf Looks the Economic Situation Squarely in the Eye

Ben Bernanke Disappoints Ryan Avent: Federal Reserve Communication Edition


Monetary policy: The Fed's have-it-both-ways policy: I appreciate that [Bernanke] lectured the government on its heedless fiscal policymaking, but I found the tone on monetary policy to be confusing and timid…. I just hope that whatever the Fed opts to do in September is spelt out more clearly than its August decision…. [T]he frustratingly vague nature of the August statement… is part of a broader pattern at the Fed of failing to use the expectations channel effectively…. It is absurd to speculate about whether the Fed has the ability to provide more of a boost to the economy while the expectations tool is sitting on the shelf. I think Mr Woodford is right in suggesting that the main value of Fed purchases is in demonstrating the central bank's commitment to achieving its stated goals. By leaving those goals vague, the Fed seriously undercut its own stimulative effort. I don't know why. I just hope the Fed works through its hang-ups about clearer signalling by the conclusion of the September meeting.