Bernanke's QE2 Apologia ExplainedSubmitted by havaprayer on Tue, 11/16/2010 - 09:29
"Although asset purchases are relatively unfamiliar as a tool of monetary policy, some concerns about this approach are overstated. Critics have, for example, worried that it will lead to excessive increases in the money supply and ultimately to significant increases in inflation.
"Our earlier use of this policy approach had little effect on the amount of currency in circulation or on other broad measures of the money supply, such as bank deposits. Nor did it result in higher inflation. We have made all necessary preparations, and we are confident that we have the tools to unwind these policies at the appropriate time. The Fed is committed to both parts of its dual mandate and will take all measures necessary to keep inflation low and stable."
In short, do not worry. Even though our record is replete with policy mistakes great and small, including those that played a central role in bringing about the present dire situation, we have complete confidence in our ability to micromanage the macroeconomy and, via our central planning of credit flows, the microeconomy, as well. The conditions that kept hyperinflation from breaking out during the past two years may be expected to persist indefinitely, allowing us to keep the inflationary Sword of Damocles from breaking its thread and destroying the economy.
Read article here: http://www.independent.org/blog/index.php?p=8419