Economist Warns the Fed Can’t Reach Inflation Target Without ‘Crushing’ US Economy – Economics Bitcoin News
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A prominent economist is warning that the Federal Reserve may have to take drastic measures to reach its inflation target, potentially leading to a “crushing” of the U.S. economy.
In an article published in the Wall Street Journal, economist and former Fed governor Kevin Warsh argued that the central bank’s current low interest rate policy is unlikely to be enough to achieve its 2% inflation target. Warsh warned that the Fed may instead have to take more extreme measures, such as quantitative easing and negative interest rates, which could have devastating effects on the U.S. economy.
Warsh noted that the Fed has already implemented a number of policies to stimulate the economy, including cutting interest rates to near-zero levels, but these measures have not been enough to reach the desired target. He argued that the Fed may have to go further, with measures such as quantitative easing and negative interest rates, which could have a negative impact on the economy.
The economist warned that these measures could lead to a “crushing” of the U.S. economy, as businesses and individuals would be unable to cope with the sudden rise in borrowing costs. He also noted that such measures could lead to a surge in inflation, which could cause further economic disruption.
Warsh’s comments come as the Fed is facing increasing pressure to reach its inflation target. The central bank has been struggling to reach its 2% inflation target since the financial crisis, and has been unable to do so despite a number of measures.
While Warsh’s comments have sparked a debate among economists, the Fed has yet to make any move towards implementing the measures he suggested. However, the central bank will likely continue to monitor the situation and could take further action if needed.
In the meantime, economists will continue to debate the merits of Warsh’s suggestions and the potential impact they could have on the U.S. economy.
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