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IHS Chief Economist Nariman Behravesh and WSJ Senior Writer Steve Moore on the latest Fed efforts to help boost the economy.
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Hours the Fed cracking up that stimulus not cranking up the stimulus not to full blast.
It's dropping 45 billion dollars more a month on US Treasury's inflation of ballooning balance sheet -- dams.
Can keep tracking where have all the tricks it's tried to jolt the economy into recovery.
What -- publisher apartment -- so -- time.
To calling the Fed busters to stop Edward aching from messing with our economy back.
Joining me now is an -- -- -- bear bash IH asked chief economist and Steve Moore.
From the Wall Street Journal steep strictly as a kind of guy -- like our ghost buster fat buster I would if bank.
Well I was so as -- what shocked by this decision yeah how many or -- You're breakevens right so that's what does this QE infinity war on right now I don't around we've had is such a huge gay illusion of of liquidity into the market in the fad.
You know I think a lot of people all this but some -- that the Fed already owns about a trillion dollars worth of federal.
Thirty year treasury securities on its books and now it's gonna purchase forty.
Billion dollars more a month that you know that's just a very fancy way for saying what we're doing right now.
-- -- we're just monetize around -- Treasury Department is issuing that that the Federal Reserve is is purchasing the data that purchases that debt.
By printing money.
Yes chairman I mean a lot of people expected before the announcement today that they were gonna say they're backing off instead they said that they're gonna target the unemployment rate.
You know as if this would give them license to go on for much longer.
Were you surprised at do you think it's good idea -- think Steve is right that we're just monetizing debt.
While certain let's let's start off with -- we were not surprised we pretty much expect -- to them to do what they ended up doing.
I don't think it's our it would be great if not they're gonna -- -- -- up.
-- yes absolutely be the only issue was what was the threshold that there are gonna pick.
So we we pretty much yes that it was coming basically.
Bob now as it is it a good idea which is sort of the fundamental question I think you guys are -- -- Now maybe I -- -- I'm a bit of an agnostic I'm not an atheist I'm not a true believer I'm agnostic.
I think the reality is the impact of the various -- have been small but slightly positive.
It's not done a lot of damage yes.
But it's also not that a lot of good so again.
As -- -- agnostic as far as you know is a good.
So Steve I mean that begs the question if we're doing it during an -- as an airman says it's doing.
A little bit of good but not that much is -- going to be a bill to pay down the road -- get it always say.
Here's the -- wasn't worth it.
That's the big question and we don't know the answer to that because we -- predict with the futurist but I think.
That's -- little bit of the fly of the strategy above basically.
Saying well we're gonna stimulate the economy now it's very much like the spending patterns that we've seen -- and it's the reason why the stimulus plans -- for work very well because you're just.
You know your your borrowing now and having to pay this money back.
It's interest thing I -- debt to -- job counseling who now oversees the fact that the financial services committee in the house said.
And he was somewhat outraged by -- he said -- we have the -- now engaged not system monetary policy but fiscal policy and that's not in America charter.
-- I mean chairman Dick -- also would you think there's a bill to pay down the right do you think we're gonna come back later and say here's here's what it's costing us was worth it what would bill be.
Well.
I mean I think it -- it is a good point and then it all boils down to the exit strategy.
And the worry is that now -- -- talk about exit strategy and when was in the summer of 2011 but then that they its balance -- was much smaller than -- and an end up being.
So the question now is what is the exit strategy with this much bigger balance sheet.
That could well be that bill to -- how -- they gonna unwind this.
How quickly will -- unwind at what damage could that -- to the economy those are open questions I think that as a source of some concern.
Yeah and also -- mean if they say that they're pegging their exit argued -- -- implies that they think they're having an impact on the jobs market.
And I'm and -- look I'm not so they really haven't unless you see the counter factual would have been worse they didn't do it Steve do you think that they're having an impact on the jobs market.
Yeah I think you're asking the wrong question unless it's not whether they have -- whether they sure.
And you know I've got a traditionalist I believe the Fed should have one -- all of one role they shouldn't even look at unemployment rate.
They're role should be to control inflation and to keep price price stability outlining that price stability.
And I just wanted to keep their eye on the ball this idea of having two balls and there -- one time I think is a recipe.
For you know real trouble -- line.
I I agree with you Steve -- I think that ship has sailed thanks about the US.
-- -- tonight thanks about your returning it's great discussion we appreciate it.
