John Cochrane has analyzed the implications of the expansion of the Federal Reserve’s activities from its traditional targeting inflation and unemployment to its more recent allocating credit to sectors of the economy by acquiring non-traditional financial assets such as mortgage backed securities. Ben Bernanke offered a justification for buying non-traditional assets Friday at the annual Monetary Symposium at Jackson Hole, Wyoming by referring to the premise that different classes of financial assets are not perfect substitutes in investors’ portfolios and effective financial accommodation given the magnitude of the ... (full story)