David Beckworth

No Time to Taper

The Federal Reserve needs to loosen its grip

The Federal Reserve appears eager to begin “tapering,” that is, reducing the monthly bond purchases it is making to support the economic expansion. Based on FOMC projections and Chairman Ben Bernanke’s comments, the Federal Reserve expects to start tapering later this year and to end asset purchases by the middle of 2014. Though the economy is improving, this discussion is premature.

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Both the left and the right have been consistently peddling the wrong prescriptions for our economy. Most liberals are focused on the need for additional fiscal stimulus, and dead-set against any premature moves toward what they consider “austerity.” Spending cuts, they say, would weaken the economy. Most conservatives are equally insistent that spending cuts need to begin now—and claim that by reducing expectations of future tax increases these cuts would help the economy.

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