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The Fed’s ‘Talking Cure’
This may be surprising to many people. After all, Fed Chairman Ben Bernanke described the “stagnation in the labor market” as a grave concern. Shouldn’t the Fed’s response be more muscular than wordy? Whatever happened to talking softly and carrying a big stick? Traditionally, changes in Fed policy mostly came in the form of changes to targeted interest rates or monetary aggregates. The Fed would announce that it was raising or lowering, say, the overnight Fed Funds rate target. In order to hit the target rate, the Fed would buy or sell short-term Treasury bonds in so-called “open market operations.” More ... (full story)
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