Autopilot in Reverse: Fed Discusses Regular Use of QE in Non-Emergencies


San Francisco Fed President admits open debate on permanent QE as a regular tool. Autopilot is in reverse gear.

Seven Fed presidents gave speeches this week. San Francisco Fed president Mary Daly provided the closing yap for the week.

Daly said the Fed is debating if balance sheet should be regular tool.

“In the financial crisis, in the aftermath of that when we were trying to help the economy, we engaged in these quantitative easing policies, and an important question is, should those always be in the tool kit — should you always have those at your ready — or should you think about those are only tools you use when you really hit the zero lower bound and you have no other things you can do,” Daly told reporters after a talk at the Bay Area Council Economic Institute.

“You could imagine executing policy with your interest rate as your primary tool and the balance sheet as a secondary tool, but one that you would use more readily,” she added. “That’s not decided yet, but it’s part of what we are discussing now.”

Image from She Dropped Out of High School. Now She’s President of the San Francisco Fed.

In Control Not

This discussion is further admission that

  1. The Fed is not in control
  2. The Fed seeks to manipulate and placate the markets

Any sensible person already understood that.

Autopilot In Reverse

In December, the Fed Chair Jerome Powell said the Fed was on "autopilot" for QE reduction. Following a market taper-tantrum, Powell reversed course.

Today, the truth comes out: If the market throws a tantrum, the Fed will listen.

Related: Damn, That's a Lot of Speeches

Mike "Mish" Shedlock

No. 1-21

With the US labour market in shambles and unemployment horrifically high, dramatically more QE is required. This time they should definitely not buy crappy assets like mortgage bonds or US treasuries, but actually buy assets that have an applicability to strategic production and supply chains.


The problem is there are 210M adults to quell in the US. As populations rise more central control of the economy takes place.



"So I know you say deflation Amish. And you’ve said it since 2007. As a consumer, to me it looks like inflation. How is it not?"

For starters, you have read very little of what I said and understood none of it.

I correctly rang the deflation bell in 2005-2007 and it happened. Deflation went off in 2009. when the Fed reinflated corporate bonds.

I stated many times the economy would go in and out of deflation and another round is on the horizon.

Finally, it appears you do not even know what deflation definition I have been using despite reading me since 2007.


"Fed Discusses Regular Use of QE in Non-Emergencies"

QE has been going on continuously since the 2008 recession.

In August 2014, FED Bullard said that QE shouldn't end. AS the FED pushed back on their handle, Japan took over and pulled on theirs. It was a hand off, not a termination of QE. Once the hand off was complete, Bullard said QE should end. A sleight of hand trick. The EU is still what, running negative rates? I just never ends.

Andre D
Andre D

Jesus, more worthless jobs. How many economists, government workers, and other useless highly compensated "tools" do we need. Can't wait for the coming recession and pension implosion; it cannot come soon enough. Yes, people will be hurt, but we need to trim this BS excess and reset. Should have never allowed these idiots to steal from taxpayers to bail out the banks back in '08. Criminal and they know if they try it again there will be revolution in the streets.