SMP: Two Tales of Unintended Consequences -Tale 1

Primera parte de un comentario sobre las consecuencias no intencionadas de dos bancos centrales desde las crisis del 2008. En la primera parte, junto a Andreas Hoffmann (Twitter: @Andhoflei) analizamos al caso de la Reserva Federal. En la segunda parte (aún por publicar), analizaremos el caso del Banco Central Europeo.

Estos análisis son co-blogueados en Sound Money Project y Think Markets

Even when a policy is successful in achieving its desired ends, we have to consider its unintended and unforeseen consequences, resulting from cumulative market adjustments to policy changes that make it hard to judge the overall outcome of a policy in our complex economy. The Federal Reserve and European Central Bank’s monetary policy responses to the 2008 financial crisis offer two tales of major unintended consequences. This post discusses the unintended outcomes of the U.S. Federal Reserve’s crisis policies. In our next post, we will address ECB policies.


One of the major challenges the Fed faced during the 2008 financial crisis, after Lehman was allowed to fail, was the loss of confidence in the financial markets and the resulting increase in money demand that led to a decline in the money multiplier. The scenario was even more delicate from the Fed’s perspective due to the presence of a number of financial institutions that the Fed considered too big to fail.

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