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Inflation
April 9, 2009

Is there any limit to the Fed increasing the monetary base?

Inflation

"Having downgraded its economic outlook, the Fed wanted to provide additional stimulus.

Officials settled on 'substantial additional asset purchases' because schemes to provide finance for credit markets were taking a long time to scale up."

'"Fed officials agreed the monetary base was likely to 'grow significantly' as a result of large-scale additional asset purchases – but still described this as a 'consequence' of policy rather than a channel through which it might work.

One official 'in particular' did put specific weight on the need for 'sustained increases in the monetary base.'  But the Fed still stopped short of embracing a target for money growth or the logic of so-called 'quantitative easing' – leaving a difference between its avowed strategy and that of the Bank of England even though both are now buying government bonds."

*This information is solely an excerpt of a third-party publication and is incomplete. Please subscribe to the referenced publication for the full article. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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