Fed needs to decide between what’s operationally feasible and what’s clearly desirable

Bloomberg Opinion/Mohamed A. El-Erian

cartoon showing a broken down tow truch pulling a disable economy

“The ongoing stalemate in Congress on the next relief package adds to concerns about what lies ahead in a situation of shrinking income support from the government, a less dynamic labor market, and continued business investment hesitancy. The outlook for the rest of the world provides little relief for this bleak picture.”

USAGOLD note:  This article was published before last week’s Fed meeting. It anticipated the muted response from the Fed citing “the limited effectiveness” of monetary policy in addressing the economic impact of the pandemic. As we mentioned in a DMR following the FOMC meeting, after all is said and done, the Fed appears content, at least for now, to let the tincture of time do its work while implicitly shifting the responsibility to the federal government for the next round of stimulus.

Repost from 9/22/2020

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