“See saw”

It´s all “up for grabs”. Who´ll win? The “hardcore” or the “softcore”. When you reason from rates of change (be it prices or real growth) forgetting the depth of the hole you fell into, you´re bound to get it wrong. And that´s the major problem with IT: It has no “memory”.

There are “outsiders” (not voting) like Bullard (St Louis), Lockhart (Atlanta) and Lacker (Richmond) who would feel better if QE2 had an “early termination”. The  “insiders” (voting) who feel the same include Plosser (Philadelphia) and Fisher (Dallas). Kocherlakota (Minneapolis) used to be dead set against but he just made a presentation in Marseille arguing:

“The bubble collapse has no impact on unemployment or output, given sufficiently accommodative monetary policy,” the bank president said, referring to an economic model in the text prepared for a speech today in Marseille.

But maybe he´s just talking about what should have been done. But since you didn´t do it, now “it´s too late” because inflation will “take off”.

“White knight” insiders include only New York´s Dudley (a permanent member and Vice Chairman) and Chicago´s Evans. Outsider Rosengren (Boston) is in this group.

Some of the “testimonies”:

1. Bullard:

March 28 (Bloomberg) — St. Louis Federal Reserve Bank President James Bullard said policy makers should review whether to curtail a plan to buy $600 billion in Treasury securities, noting that the U.S. recovery may not need that much stimulus.

“The economy is looking pretty good,” Bullard said to reporters in Marseille, France, on March 26. “It is still reasonable to review QE2 in the coming meetings, especially this April meeting, and see if we want to decide to finish the program or to stop a little bit short,” he said, referring to the second round of so-called quantitative easing.

2. Evans:

March 28 (Bloomberg) — Federal Reserve Bank of Chicago President Charles Evans said recent reports indicating a more sustainable economic expansion won’t alter the central bank’s plan to purchase $600 billion in U.S. Treasuries through June.

“Despite recent improvements to the outlook, we are not yet at that point” when “a change in the stance of monetary policy will be necessary,” Evans said today in the text of a speech in Columbia, South Carolina. “Slow progress” in lowering unemployment “and underlying inflation trends that are too low lead me to conclude that substantial policy accommodation continues to be appropriate.”

3. Rosengren

March 28 (Bloomberg) — Federal Reserve Bank of Boston President Eric Rosengren said that recent economic growth will not do much to lower the unemployment rate.

“While GDP, the growth in the economy, has been positive, it hasn’t been positive enough to make much of a dent on the unemployment rate,” Rosengren said today in a panel discussion hosted by the Boston Globe.

Note: The outsiders participate in the FOMC discussions and have an influence on decisions.

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