[PEN-L:32536] RE: deflation? redux

["Devine, James" <jdevine@xxxxxxx>]

Title: RE: [PEN-L:32528] deflation? redux

Larry Elliott says that fears of deflation explain
> why the Fed cut interest rates this month, and why it would be prepared to back
up further cuts in the cost of borrowing with more unconventional means of
stimulating the economy - perhaps by printing more cash, buying treasury
bills or intervening in the foreign exchange market to lower the value of
the dollar.<

I don't get why the first two are "unconventional." The standard open market operations needed to lower market Federal Funds rate to a new target level involve buying treasury bills (or other treasury securities) and thus, implicitly, the printing of more cash.

Lowering the exchange rate is somewhat controversial, but all else constant, lowering the target Fed Funds rate has the effect of driving the dollar exchange rate down.

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Jim Devine jdevine@xxxxxxx &  http://bellarmine.lmu.edu/~jdevine