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Spartacus
04-13-08, 03:14 AM
http://thoughtsfromthetrenches.blogspot.com/2008/04/future-actions-of-federal-reserve-and.html#Future

Makes lots of references to the work of NY Fed economist Doogie Houser ... errr... Gauti Eggertsson.

http://www.ny.frb.org/research/economists/eggertsson/pub.html

And especially this paper
http://www.ny.frb.org/research/economists/eggertsson/JMCBpaper.pdf

EDIT: the blog author claims the paper disappeared but It seemed to come down fine for me.
Also, IMHO this partly explains why Bernanke did not slash rates as quickly as I thought he would, given his earlier helicopter statements. He was brainstorming other ways to do it, and maybe lobbying Paulson et al to go along with the FED's plans.

phirang
04-13-08, 10:13 AM
brilliant post!

I wonder if their assumption that US debt will "sell" indefinitely has meaning if the governments buying them start to tire of food riots...

The Outback Oracle
04-13-08, 08:29 PM
brilliant post!

I wonder if their assumption that US debt will "sell" indefinitely has meaning if the governments buying them start to tire of food riots...

It seems that "recovery" from the current troubles means returning to "normal" just as they were before the crisis of last July. So all the US have to do is prress a few of the right buttons and inflate its way out. However, I think you hit a key point. This idea of "recovery" assumes the rest of the world is going to accept growing US debt 'ad infinitum'.
As you point out, that assumption "might" be wrong!