Out of Control Policy Blog

Fed: "Just Relax, We Got This"

In a speech on Monday, New York Federal Reserve Bank President Bill Dudley talked about the state of the economy. He argued that the real concern right now is with potential deflation, not inflation. And he made clear that interest rates aren't likely to increase soon. There is a lot of concern out there that the Fed might miss the timing for exiting the current period of loose monetary policy. But never fear, the Fed is here. As Dudley stated:

The Federal Reserve needs to ensure that market participants and the public understand that the FOMC has the tools to exit smoothly from the very low federal funds rate, and that it stands ready to do so when the time comes.

Basically, Dudley is saying what Bernanke has argued before Congress: "Don't worry, we got this under control." And, it's possible they do. It's possible the Fed might make the right call on when to tighten the money supply. But my fear is that there is a much greater likelihood that they'll screw it up. After all, they didn't get it right after the last recession.

(HT: RealTimeEconomics)

Anthony Randazzo is Director of Economic Research

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Comments to "Fed: "Just Relax, We Got This"":

Investor | October 7, 2009, 11:43am | #

Does the fact that 10 year Treasury Inflation Protected Securities were being auctioned Monday have anything to do with the timing of Bill Dudley's ridiculous claim that there will be no inflation? If I tried to manipulate the market like he does, I'd go to prison.

Cynthia M. | October 8, 2009, 5:16am | #

Until now, after the financial crisis subsided, many people are still doubting if how long we can get this over totally. Many thought Obama’s not doing anything good. And Gore Vidal, one of most famous American authors over the past 50 years, has been taking aim on Obama. He said that we will see a dictatorship arise in the United States. (How it's going to work is that the Republicans will take over after Barack fails in the next election and things will get out of control – and he isn't alone in that opinion.) Maybe Gore Vidal is right – we should get payday loans and head to Canada.

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