Gilles Saint-Paul, 06 December 2007

Many observers call for US interest rate cuts to avoid a recession, but this is likely to perpetuate the current imbalances in the US economy. The US probably needs a recession to get the required correction in house prices and consumer spending. The Fed should signal its intention to hang tough and start thinking about how big a fall in GDP it will tolerate before intervening.

Charles Goodhart, 24 September 2007

Recent research suggests that the additional predictive power of the yield curve – beyond the information in other macroeconomic variables – often appeared during periods of uncertainty about the underlying monetary regime. This is true, for example, of the US during the Volcker disinflation episode.

Axel Leijonhufvud, 25 June 2007

An expansionary monetary policy and an historical conjuncture that happens to produce no inflation will lead to asset price inflation and deterioration of credit. At some stage, central banks will have to mop the liquidity or see inflation do it for them.

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