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Home | Blog | Fed Admits: We Don't Know How QE Works

Fed Admits: We Don't Know How QE Works

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01/07/2014

Amazing! According to a Reuters Report, President of the Federal Reserve Bank of New York William Dudley admitted that the Fed does not know how Quantitative Easing policies work to help the economy and that they don't have a well developed model of the economy that incorporates a "realistic" financial sector.

Yet "we still don't have well-developed macro-models that incorporate a realistic financial sector,' William Dudley, president of the New York Fed, told an economics conference. "We don't understand fully how large-scale asset purchase programs work to ease financial market conditions, there's still a lot of debate ..." he said. "Is it the effect of the purchases on the portfolios of private investors, or alternatively is the major channel one of signaling?"

Mark Thornton is a Senior Fellow at the Mises Institute and the book review editor of the Quarterly Journal of Austrian Economics. He has authored seven books and is a frequent guest on national radio shows.

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