The Federal Reserve should wait for more evidence the economy is slowing before starting a third round of quantitative easing, or QE3, according to Marvin Goodfriend, a former Richmond Fed policy adviser.
Folks who have a vivid recollection of the Great Inflation of the 1970s must wonder why anyone would wish even a trace of that upon future generations. Yet that seems to be the risk some economists are willing to take.
Chairman Ben S. Bernanke moved the Federal Reserve further into uncharted policy territory in combating joblessness by tying the bank’s interest-rate outlook to unemployment and inflation, while committing to an even faster expansion of the central bank’s balance sheet.
Ben S. Bernanke argued for 15 years that the Federal Reserve should announce a numerical inflation target. When he finally got his way in January, the victory allowed the central bank to elevate its other mandate: full employment.