Jack Ewing of Economix has this superb post on the topic.
Archive for September 21st, 2011
He says if Friedman was alive he would have favored more QE which then leads to credit creation and recovery from the current crisis. People say QE by Fed is Treason, by the measure would we call Friedman a traitor?
His central idea is that growth in credit is what would lead to recovery from the crisis. Credit growth is still very weak and hence we continue to struggle.
Why more QE? He says QE creates credit out of thin air. When credit is created that way, people can buy things without anyone else having to cut its spending.
This is a terrific speech from Fed Governor Daniel K. Tarullo. He gives you a different perspective (not entirely new though) on thinking about financial firms and their regulation.
He says economists should use insights from Industrial Organisation Economics (IO) to help understand the developments in financial markets: