It takes time to determine what are the policy objectives of the government. Sometimes, the government or central bankers do not know what are the goals themselves. Other times the policy objectives are obvious, but we want to make them more complex than they have to be.
What is becoming clearer with monetary policy is that central bankers want to reflate their way to success. There has been more recent talk of using QE3 until unemployment goes down, but the main purpose is to cause asset price reflation. Get housing prices up. Get consumer balance sheets in better shape. Cause asset prices to gain until there is more investment in equity markets. Make bonds more valuable as rates fall. The objective to have wealth gains be the transmission mechanism.
Embrace the reflation.
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