Archive for the ‘QE4’ Category

Abnormalization and QE4

Monday, September 28th, 2015

It seems to be a policy of the Federal Reserve Board to never use a two-syllable word when a four- or five-syllable word is available.

So we have “quantitative easing” instead of “bond buying,” “tapering” instead of “reducing,” “forward guidance” to describe announcements of future Fed activities, and “macroprudential supervision” for “we have no idea what to do, but we have to say something that sounds important.” US-economy_try-it-now-707x404

What may be the most annoying Fed malapropism, though, is the Fed’s use of the word “normalization,” as in the following quote from Fed Chair Janet Yellen after a recent Fed meeting:

“For all of us, the appropriate policy decision is going to be data dependent and all of us will be looking at the incoming data and our opinions about the appropriate timing of normalization are likely to shift as we look at how the data evolves.”

In other words, we’re currently going through a period of abnormalization and the return to “normalization” will begin when the Fed starts raising interest rates.  Although, after eight years of zero interest rate policy (ZIRP), shouldn’t we consider ZIRP to be the new normal?  (more…)