Good one from Lance:
"However, while there was nothing "new" in that comment, it was his following statement that sent "shorts"scrambling to cover.
"In short, the proximity of interest rates to the ELB has become the preeminent monetary policy challenge of our time, tainting all manner of issues with ELB risk and imbuing many old challenges with greater significance.
"Perhaps it is time to retire the term 'unconventional' when referring to tools that were used in the crisis. We know that tools like these are likely to be needed in some form in future ELB spells, which we hope will be rare."
"To translate that statement, not only is the Fed ready to cut rates, but it may take 'unconventional' tools during the next recession, i.e., NIRP and even more QE."
This is a very interesting statement considering that these tools, which were indeed unconventional"emergency" measures at the time, have now become standard operating procedure for the Fed.
Yet, these "policy tools" are still untested.
Clearly, QE worked well in lifting asset prices, but not so much for the economy. In other words, QE was ultimately a massive "wealth transfer" from the middle class to the rich which has created one of the greatest wealth gaps in the history of the U.S., not to mention an asset bubble of historic proportions."
