Fed's next steps --memo

Amid mounting expectations for the Fed’s next movement, there are several possible options;

① additional bond buying (QE3)
② lowering the 0.25% interest rate it pays banks on the $1.6 trillion in excess reserves
③ pledging to keep its balance sheet near a record $2.85 trillion (as of Sept. 1)
for an “extended period” or for a specific time
④ lengthening the average maturity in its portfolio
     -----Bernanke Seizes Day With Financial Repression as Congress Shirks Policies
     -----Pimco, Goldman, RBC Say Bernanke to Revisit Operation Twist
     -----Fed ‘Twist’ Could Push U.S. 10-Year Yield Toward 1.6%, CRT Capital Says
     -----‘Helicopter Ben’ risks destroying credit creation

and according to the minutes of August 9 meeting, some officials argued that “the Fed should have linked its pledge to achieving “explicit values” on the nation’s unemployment rate or an inflation rate”.
     -----Evans Calls for Further Fed Stimulus to Reduce U.S. Unemployment to 7.5%
     -----The Fed's Dual Mandate Responsibilities and Challenges Facing U.S. Monetary Policy



After the recent financial shock, we’ve witnessed changing stream in the economic activities globally.
There are more than a few economists who point out the structural factor underlying the ‘unfathomable’ stagnation.
     -----Employers Ready to Hire Can’t Find Workers Among 9.1% Unemployed
     -----Shrinking Labor Force May Curb U.S. Expansion for Two Decades
     -----Obama Faces 27-Week Jobless Rise as This Century Is Different

Though we should learn from history about ravages of inflation, recent global economy seems a bit sagging.
Lackluster economy tends to be more vulnerable to unanticipated shock and is not necessary a bountiful soil for prices.

     -----Uncaged Inflation, a Beast Easy to Free, Hard to Control: View


     -----Stagnant August Hiring in U.S. May Signal Renewed Recession
     -----The Second Great Contraction
     -----Economies in Peril Proving Voters Aren’t Careful About What Is Wished For
     -----BRICs No Cure for Global Economy This Time as Avon to Siemens Shares Sink


     -----Central Banks Refocus as Inflation Scare Passes
     -----Food-Price Gains Driven by Chinese Consumers Defy Easing Global Inflation
     -----TIPS Offer Cheap Inflation Shield as Expectations Fall, RBC’s Latter Says


Then, in a while, we’ll see a prescription.

     -----Fed Policy Makers Prepare for Action This Month
     -----Bernanke Says Tighter Budgets May Hurt Recovery as Fed Considers Stimulus


     -----The U.S. Economic Outlook
                  Chairman Ben S. Bernanke     September 8, 2011
                       At the Economic Club of Minnesota Luncheon, Minneapolis, Minnesota







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