Macro Musings with David Beckworth cover image

Scott Sumner on Alternative Approaches to Monetary Policy

Macro Musings with David Beckworth

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Is the Fed Using Guard Rails to Control Aggregate Demand?

If the economy was expected to be heating up growing too fast, then money would flow from the public back indto the fed and vice versa. The constraint is really more on the fed not wanting to take large losses. With a proviso that if ager demand got very far off course, and the public saw this and took either very strong short or long positions, the fed could lose a lot of money.

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