MBS Week Ahead: Behold The Fed’s Giant Tranquilizer Gatling Gun

Facebooktwitterlinkedin

Posted To: MBS Commentary

The Federal Reserve's capacity and willingness to engage in aggressive easing measures is often described as a "bazooka." This likens it to an imprecise and indiscriminate weapon of immense power with a wide area of effect. Imagine Bernanke, Yellen, and now Powell, atop a hill overlooking the economic countryside, bazooka on the shoulder, scanning for signs of unrest and snuffing them out with monetary firepower. The analogy works, but it's not the right one this time around. In the past, the bazooka resulted in both the debt and equity sides of the financial market moving to new extremes. It wasn't immediate either. Fed bond buying and ZIRP (zero interest rate policy) were more like contributing factors in a large scale economic recovery that also happened to coexist…(read more)

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Facebooktwitterredditpinterestlinkedinmail
Show Buttons
Hide Buttons