Does the Fed Have the Tools to Achieve its Dual Mandate?

Michael Stephens | September 25, 2013

Stephanie Kelton recently sat down with L. Randall Wray to discuss, among other things, the news that the Federal Reserve will refrain for the time being  from tapering its asset purchases (QE).

Wray took the occasion to elaborate on his view that quantitative easing is ineffective as economic stimulus and that — given the tools at its disposal — the Fed can’t actually carry out its dual mandate (on employment and price stability).

One interesting wrinkle here is that Wray makes this case not just with regard to asset purchases — which even some QE supporters have admitted don’t accomplish much in and of themselves — but also the “expectations channel” (forward guidance).

Kelton and Wray also touch on the latest debt ceiling showdown and the future of retirement security programs.

Download or listen to the podcast here.


2 Responses to “Does the Fed Have the Tools to Achieve its Dual Mandate?”

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  1. Comment by Tyler HealeySeptember 27, 2013 at 8:23 am   Reply

    MMT argues that negative interest rates are deflationary. Therefore, is it possible that high interest rates are expansionary? Looking at the high employment growth of the 1980s and 1990s, this appears to be so.

  2. Comment by Tyler HealeySeptember 27, 2013 at 8:57 am   Reply

    “Positive rates are a govt subsidy and negative rates a tax.” – Warren Mosler

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