The character of current monetary policy is different, as the Fed’s gobbling up of Treasurys and mortgage-backed securities has boosted bank reserves and the monetary base 24%.
M2 has surged 27% since the outbreak of the pandemic. Commercial banks are now in good shape and eager to lend, in contrast to their crippled state in 2009.
The Fed should be more realistic about current risks and prepare markets for a timely unwinding of its asset purchases and an eventual rise in interest rates.
Mickey D. Levy and Michael D. Bordo WSJ April 26, 2021
The process of ending the Fed’s giant bond-buying program, and subsequently raising interest rates