Peter Stella on the Quasi-Fiscal Implications of Central Bank Crisis Intervention
Macro Musings with David Beckworth
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The Fed Opened the Window on C Street and Yelped Out the Window
Mortgage rates fell to record lows, yourself, other people. The Fed opened the window and said, not only will we refinance all of the high coupon mortgages that we're holding now, but we're going to buy even more. So I think it was a financial mistake of the Fed. It was a distributional mistake because the US taxpayers on the losing end of that trade and the wealthier part of the population is on the gaining part of the trade. What else happened? I think 20 months of 17 and a half percent house price inflation at an annual rate. And then the last point I would make is that rents have gone up a lot more than the CPI.
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