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July 26, 2012

The FED is at it again

So the Fed is poised for another QE. Here is my prediction: the monetary base will grow by a significant amount and checking accounts will not change much. In other words, the money multiplier is broken. In addition, this policy will do nothing good for the macro economy. Finally, it poses hugh problems for the future, because there is no credible exit strategy. What is the Fed eventually going to do, raise reserve requirements?

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