OMG NO NOSECONES
They do seem to be worried about deflation. It seems to be a bad word in some circles.
Happiness is zero-gee with a sinus cold.
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Well deflation tends to wreck the economy. Just look at what happened to Japan.
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Well you also have the issue of people reacting to "expected" monetary actions. Bernake did this out of the blue to insure that was unexpected to have the full impact on interest rates.
I also didn't read it too closely the first time but upon rereading the article only vaguely indicates that "it is in essence printing money" but it doesn't really indicate whether it was stored up cash or not. I suppose it doesn't really matter to the situation. They'd both be equivalent to printing money.
edited 6th Nov '10 9:24:46 PM by breadloaf
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Actually, this was widely expected. Bernanke even hinted at it in a speech back in August.
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I don't think it was super widely expected though, there has to be a bit of surprise for it to have any effect otherwise, people will already have accounted for the extra money and it will do nothing to help the economy. This isn't even considering how shaky our understanding of economics is.
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People already did account for the extra money. That's why bond rates have been falling for several months.
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Okay well I haven't studied this specific issue in that much detail, all I'm saying is that if it was widely expected and everyone already accounted for the extra cash, then what he has just done is completely useless. Enjoy the inflation without any benefit.
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It's not useless, it just means that the benefit comes early.
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Anyway, hyperinflation is currently a negligible risk.
edited 6th Nov '10 3:02:26 PM by storyyeller
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