Wednesday, September 23, 2009

Let's Give Them Something to Talk About

The title is from an old song by Bonnie Raitt.  And although the new Federal Open Market Committee (FOMC) announcement doesn't seem to presage anything drastic, there's still a teachable moment here. 

If you draw your students attention to the last half of the statement, it states that the Fed will be slowing the pace of purchases of various froms of debt.  Essentially easing off the heretofore accomodating policy stance.  This is not tightening.  And that's the issue that's worth discussing with students.  How will the markets react?  (Currently they're up, but...)  More importantly, how will the economy in general react?  That's the bigger and more important question.  Much will depend on whether we another slowdown, or whether we fear an overheated economy.  If fears are balanced, who knows. 

Just one more thing to "talk about."

No comments: