Will Janet Yellen Pull the Trigger? | Andy Constan
Forward Guidance
00:00
The Risk Premium Mechanism and Portfolio Volatility
Aaron Carroll: Quantitative easing is a very interesting case where the supply of assets may not change, but the treasury bought the Fed buying assets creates new money. He says when that portfolio is volatile, people naturally want to own less of it. And so if they risk somebody has to be encouraged to take on that risk, and they do that through the risk premium mechanism, he says.
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