Wednesday, 11 January 2012 7:37 AM ET

Better monetary policy and better coordination between monetary and fiscal policy is worth underwriting risk, says Paul McCulley, former PIMCO portfolio manager/Global Interdependence Center managing director

McCulley: We Are In a ‘Liquidity Trap!’
Former Pimco portfolio manager Paul McCulley says we need to accept that we are in a “liquidity trap” that requires “a whole different set of economic policies.”

Category: Federal Reserve, Video

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

7 Responses to “McCulley: We Are In a ‘Liquidity Trap!’”

  1. Almitra says:

    Okay, Paul McCulley. Agreed, we are in a liquidity trap. So where is the follow up question; how do you recommend we get out of the trap? And better yet, the follow up answer.

  2. dbunn says:

    it looks like we’re on our way out of it, though according to Mankiw:

  3. ricecake says:

    OMG! He looks sooooooo ….O 60S (LOMAO) . What’s hell is McCulley doing recently? Sing or play in a rock band?

  4. Market Panic says:

    McCulley is full of beans (or using too much of cannabis), and as usual he is “talking his book” and consistently “wrong much more than right”.

    Contrarily to McCulley’s B.S., though there are number of policy choices under a liquidity trap, implementing these policies is very difficult. There are likely severe side effects from each unconventional monetary policy option and the impact of the policies is also uncertain (contrarily to Krugman’s claims). Bank of Japan tried a number of strategies which have been also been tried by the Fed (and other central banks) in this crisis, but it did not have the desired effect (unless the desired effects were to help Wall Street bank profitability and oil above $100) because there is just too much debt at all levels (and too much debt is also a global problem).

  5. Market Panic says:

    @ ricecake “What’s hell is McCulley doing recently?”

    Midlife Crisis

  6. Market Panic says:

    @ Almitra

    1. Fiscal Policy (Keynes remedy to a liquidity trap — he actually coined the term liquidity trap.): increasing government expenditure, cut taxes, specific programs for housing etc.

    2. Unconventional Monetary Policy:
    a) Credit Easing

  7. Market Panic says:

    b) Quantitative Easing
    c) Communication
    d) Inflation Targeting
    e) Price Level Targeting (proposed by Evans)
    f) Exchange Rate Targeting
    g) Buying Foreign Assets
    h) Nominal GDP Targeting

    3. Money Financed Fiscal Stimulus (proposed by Meyer and Bernanke himself suggested this option to
    Japanese policymakers — an independent central bank printing money and aiding a government borrowing program)