Fed's Kashkari says need to keep up support for economy

[turbinetree]

Source: Reuters

REBOOT-LIVE
FEBRUARY 1, 2021 12:33 PM UPDATED 5 MINUTES AGO
By Reuters Staff

(Reuters) - The U.S. central bank and Congress have responded more to the COVID-19 crisis than they did in the last crisis, Minneapolis Federal Reserve Bank President Neel Kashkari said, and they need to do still more to return the economy faster to its pre-crisis footing.

“Right now I’m not concerned about it - this is like wartime spending,” Kashkari said at an online seminar held by Montana’s Bureau of Business and Economic Research, in response to a question about the risks of government borrowing too much in the face of the pandemic. “We have the capacity to do what we need to do.”

The Fed has said it will keep interest rates at their current near-zero level until the economy reaches full employment and inflation not only reaches 2% but looks set to exceed it for some time. It has also pledged to keep buying at least $120 billion of Treasuries and mortgage-backed securities until there is “substantial further progress” toward both of those goals.

Reporting by Ann Saphir, Editing by Chizu Nomiyama

Read more: https://www.reuters.com/article/us-usa-fed-kashkari/feds-kashkari-says-need-to-keep-up-support-for-economy-idUSKBN2A135J?il=0

[bucolic_frolic]

1. Easy money is the only tool they have

[DeminPennswoods]

2. If no one wants to borrow or has the wherewithal to borrow,

Last edited Tue Feb 2, 2021, 12:33 AM - Edit history (1)

interest rates can be 0 and there will be no takers for the money. This is the lesson of The Great Depression when interest rates were also 0. Only direct government spending can rejuvenate the economy.

[roamer65]

4. One of the problems of the GD was they left interest rates too high for too long.

October 1929 the federal funds rate was 6 percent. By October 1930 it was still 2.5 percent, even in the face of a constricting M1 money supply. That constriction negated most of the interest rate cut.

The correct response should have been to invoke negative interest rates and immediately suspend the gold standard in 1929 in order to inflate the money supply.

[IronLionZion]

3. I wish we didn't have the Trump tax cuts

or the Bush wars, or that Reagan never existed, and so on....