Roundtable September 2nd, 2012 at 10:35 pm If you’re looking for three economists, including yours truly, debating everything under the sun, look no further. Share the post "Roundtable" FacebookTwitterShare… Categories: Deficits, Debt and Taxes, Economic Growth, Energy, Jobs, New Posts, Recession/Stimulus | 1 Comment »
According to Ben Bernanke “Large-sized asset purchases also appear to have boosted stock prices, presumably both by lowering discount rates and by improving the economic outlook; it is probably not a coincidence that the sustained recovery in US equity prices began in March 2009, shortly after the FOMC’s decision to greatly expand securities purchases. This effect is potentially important, because stock values affect both consumption and investment decisions.”
Quantitative Easing as Trickle-Down Economics
How ironic. While many economists abhor trickle-down economic policy, they love what is in effect trickle-down monetary policy.
Bernanke explicitly targets a policy of helping the rich (those who own stocks) and then suggests that the result of making the rich richer will be increased consumption and final demand. Which will somehow trickle down to the guys and gals in the unemployment line.
A recent paper posted at the Dallas Fed notes that “… it is also worth asking whether, to some degree, this [rising income inequality] might be another unintended consequence of ultra easy monetary policy.