Monday, October 10, 2011

Deficits without tears

Deficits without tears -- David Stockman explaining the effect of central bank buying debt. It looks like this will be the course taken by both the Fed and ECB. Of course, the Fed will have operation twist but there is no discussion about lowering balance sheet. Recent announcements by the ECB have them increasing their balance sheet through lending against government debt. 

The deficit without tears approach is the most likely course of policy in the next year if there is no active fiscal policy choices implemented. 

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