St. Louis Fed President James Bullard has released a new research paper that argues that the Federal Open Market Committee’s extended period language may be increasing the probability of a Japanese-style deflationary outcome in the U.S. within the next several years. In the paper “Seven Faces of ‘The Peril’ he states :
” A better policy response to a negative shock is to expand the quantitative easing program through the purchase of Treasury securities.”
I wonder whether he was talking about ” direct ” purchase of Treasury securities,
one of the main ingredients for high future inflation.