The blog of New York Times columnist Paul Krugman recently featured a chart plotting the U.K.’s ratio of government debt to gross domestic product against the nominal yield on long-term government bonds from about 1700 to the present. See Figure 1.
Cutting back the Federal Reserve’s unprecedented monthly bond purchases is “firmly on the table” to get underway before a new chairman takes over in January, said Vincent Reinhart, chief U.S. economist for Morgan Stanley in New York.
The Federal Reserve will resume its bond purchases at some point in a strategy known as quantitative easing to bolster the economy because it wants to maintain credibility, said Vincent Reinhart , a former monetary affairs director at the U.S. central bank.
Janet Yellen as Federal Reserve vice chairman has spent time building relationships across the Fed’s regional banks and with central bankers from Shanghai to London to Mexico City -- everywhere except the corridors of power in Washington.
Odds are about 50 percent that the Federal Reserve will buy additional assets to keep its balance sheet stable and stimulate a slowing U.S. economy, said Vincent Reinhart , a former director of monetary affairs at the Fed.
Federal Reserve Chairman Ben S. Bernanke should assure investors next week that “he’ll do whatever it takes” to stimulate the slowing economy, said Vincent Reinhart, chief U.S. economist at Morgan Stanley.