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Breaking bad bond buying | Today’s top gold news and opinion


Project Syndicate/Andres Velasco/9-7-2021

photograph of Jerome Powell in virtual FOMC meeting sitting at computer screen

“While printing money to buy bonds and reduce long-term interest rates is justified during crises like those in 2008 or 2020, the case for maintaining quantitative easing (QE) in more tranquil times is far from obvious.”

graphic image of a book and reading glasses A Good Weekend ReadUSAGOLD note: Velasco, Dean of the School of Public Policy at the London School of Economics, sees a kind of moral hazard for the government that borrows short-term for expediency thereby exposing itself to greater interest rate costs when rates go up down the road. That is why he believes quantitative easing needs to end. It supports a fiscal madness that could introduce “serious risks” – both economic and political. Though Velasco’s warning carries a ring of familiarity to those who follow the fiscal-monetary debate (former Treasury secretary Larry Summers recently issued a similar warning), it will most likely fall on deaf ears at both the White House and the Marriner Eccles building.

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