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Reason Foundation

Fed: "Just Relax, We Got This"

Anthony Randazzo
October 7, 2009, 9:50am

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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