How to Think About QE3 October 19, 2012 In attempts to get the
economy on track, the aftermath of the current recession has
witnessed numerous intertwining interventions between the public
and private spheres of society. The series of quantitative
easing by the Federal Reserve are an illustration of this
scenario. The Fed will implement the third installation of
quantitative easing to stimulate the economy. However,
economists are divided on the consequences of further measures,
says Arnold Kling, a member of the Financial Markets Working
Group at the Mercatus Center. Quantitative easing is a
relatively new experiment the Fed is embarking on; thus, Kling's
examination draws from the intervention in central banks in the
markets for foreign currency. Foreign currency intervention can
take three forms: Unsterilized intervention, sterilized
intervention and sterilized intervention with a credibility
kicker. The current attempt looks like sterilized intervention,
which many deem ineffective. - Unsterilized interve