Paul Krugman: Given this grim [unemployment] reality — plus very low inflation — you have to wonder why the Fed is talking at all about reducing its efforts on the economy’s behalf. It’s just talk, but even if the Fed leaves short rates unchanged for now, statements that convince investors that these rates will be going up sooner rather than later will cause long rates to rise. And this will weaken growth and employment. Sure enough, rates have shot up since the tapering talk started. Maybe the economic recovery will continue -- but maybe not, and in any case higher rates will surely mean a slower recovery than we would have had if Fed officials had avoided all that talk of tapering.
Posted on: Mon, 24 Jun 2013 07:13:25 +0000
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