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Winter 2015

ISSN 0890-913X

Volume 30, Number 4

Categories: Winter 2015 | Monetary policy

The Bernanke Fed and "Credit Easing" Policies, 2008-2014

William N. Butos, Trinity College

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TheJournalofPrivateEnterprise30(4),2015,1–15SYMPOSIUM:SHOULDWEENDTHEFEDASWEKNOWIT?†TheBernankeFedand“CreditEasing”Policies,2008–2014WilliamN.Butos�TrinityCollege______________________________________________________AbstractIntheaftermathofthefinancialcrisis,theFederalReservepursueda“nearzero”overnightinterest-ratefloorandinitiativestomanipulatethesizeandcompositionofcentralbankassets.Bernankereferredtothispolicyas“crediteasing.”IprovideanoverviewofthesuccessionofunconventionalFedmeasuresthathaveyieldedamorethanfivefoldincreaseinitsbalancesheetsinceSeptember2008butwitheconomicgrowthbelowtrend.Ihighlightthreeareasofconcern:thedistortionofassetpricesandinterestrates,theFedasadebtenabler,andthe$2.6trillionoverhangofbankreserves.______________________________________________________JELCodes:E44,E52,E58Keywords:FederalReserve,monetarypolicy,crediteasing,BenBernankeI.IntroductionInthewakeofthefinancialcrisis,theFederalReserve’sapproachtomonetarypolicyandthetoolsitdeployedunderwentunprecedentedchanges.Conventionalpolicy—basedonopen-marketoperations,principallywithshort-termTreasurybillstoadjustshort-termrates—lostitspunchinaworldofpolicy-induced,near-zeroshort-termrates.TheCentralBankofJapanpioneeredanactivistpolicyofbalance-sheetexpansioninthepresenceofzerobondrates,largelytolittleavail.1†TheeditorsthankWilliamButosforhelpingtoorganizethissymposium.�Ithankananonymousrefereeforhelpfulcommentsandsuggestions.Theusualcaveatapplies.1InFebruary1999,theBankofJapan(BOJ)announceditsintentiontoadoptazeroovernightratepolicy.InAugust2000,thepolicywasended.FromMarch2001toMarch2006,thebankadoptedquantitativeeasing.Morerecently,theBOJannouncedanewroundofQEpoliciesinvolvingdoublingintwoyearsthebank’s1

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Title	The Bernanke Fed and "Credit Easing" Policies, 2008-2014
Authors/Creators:	William N. Butos, Trinity College
Year:	2015
Volume:	30
Number:	4
Pages:	1 - 15
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	federal Reserve, monetary policy, credit easing, Ben Bernanke

Citation:
N. Butos, William / 2015. "The Bernanke Fed and "Credit Easing" Policies, 2008-2014." The Journal of Private Enterprise, 30(4): 1-15.