Are You Prepared for ‘Unencumbered’ Interest Rate Policy?

This is a syndicated repost courtesy of The Daily Reckoning. To view original, click here. Reposted with permission.
In September Janet Yellen gave a speech in Jackson Hole, Wyoming titled ‘Designing Resilient Monetary Policy Frameworks for the Future.’ That title at least suggested that some new thinking and new policies might be on display. They weren’t. Yellen basically said that interest rate cuts, quantitative easing, interest on excess reserves and forward guidance were sufficient to pull the U. S. economy out of a future recession if needed.
In short, Yellen said the Fed’s existing toolkit is adequate, and is unwilling to consider more radical tools or remedies. The real lesson was that if you like weak growth, money printing and market manipulation, get ready for more of the same.
She dismissed the idea of negative rates. She also agreed that ‘helicopter money’ (really fiscal policy supported by Fed bond purchases to finance deficits) could be useful, but made it clear that it was up to Congress to implement that and the Fed would not lead the charge.

This post was published at Wall Street Examiner on February 10, 2017.