The Federal Reserve brought an end to a chapter of its unconventional monetary policy on Wednesday with little fanfare and no surprises. Well, almost. About the same time as Fed policymakers were preparing the announcement, former Fed chairman Alan Greenspan decided it would be an appropriate time to share a few of his own views about the state of the economy.
Greenspan said he thought quantitative easing, the program the Fed ended Wednesday, hadn't done anything to stimulate the economy. That's fair enough. Plenty of economists agree. He went on to say he thought that the lingering effects of quantitative easing could lead to inflation more or less at any moment, and that inflation is now basically out of the Fed's control.
Then he told his audience to buy gold. Apparently, Greenspan doesn't even think hiding your money in a mattress will keep it safe in the turmoil that's inevitably coming to global markets.
It is true that the journey of quantitative easing has brought the Fed into unfamiliar territory, but the worry that the central bank can no longer manage inflation is probably unfounded, as Frances Coppola has explained. Greenspan is among a group of economists who have been insisting for a while now that inflation is just around the corner. They've been wrong so far, as Noah Smith has observed, and the markets show little worry that their dire predictions will come true anytime soon.
Greenspan's comments are surprising because when he was in charge of the Fed two decades ago, he correctly guessed that loose money would not unleash uncontrollable inflation, as Ryan Cooper has written. He ignored critics (among them, Janet Yellen) who worried that it would. The result, in part, was the economy of the Clinton era, the last period of truly robust economic growth the United States has enjoyed.
You can take different lessons from this story. Cooper and Matt O'Brien argue that the Fed's end to quantitative easing was premature, and that the Fed might have to restart the program if economic conditions worsen. The editorial board of The New York Times believes that ending quantitative easing now was the right decision, but that the Fed should hold interest rates at zero for as long as possible. Ryan Avent and Brad DeLong suggest the Fed aim to raise inflation above 2 percent, its current target. And Scott Sumner thinks now would be a good time to aim for a steady rate of economic growth in absolute dollars. One way or another, these are all approaches to let the easy money flow.
What's in Wonkbook: 1) The Fed ends QE 2) Opinions: Snowden, Republicans, and CEOs 3) For-profit schools face new rules 4) Ferguson police chief to leave post 5) The national debt, state legislatures, turning out the black vote, flying to space on the cheap and more
Number of the day: One in three. That's number of children in the United States living in poverty. Christopher Ingraham in The Washington Post.
QE is over for now, but the debate about QE isn't. Some say the program helped the economy, holding down the prices of mortgages and loans. Others say it had no effect except to raise prices for stocks, mostly enriching the wealthy. Binyamin Appelbaum in The New York Times.
The program didn't restore the economy to full strength. QE may have helped the recovery somewhat, but the Fed still hasn't entirely achieved its goals of solid growth, putting people back to work, and a steady increase in prices. Neil Irwin in The New York Times.
On the other hand, the dangers of QE have been exaggerated. The Fed should have considered sustaining the program for a while longer. There is little risk to doing so, and they might be forced to restart it again soon anyway. The Economist.
Now Yellen now faces her toughest challenge: raising rates at the right time. If the Fed raises rates too early, the higher cost of loans will discourage borrowing and spending. If the Fed waits too long and markets become confident that rates will remain low, bubbles could form as investors take on risky bets. Ylan Mui in The Washington Post.
EL-ERIAN: The Fed is taking each day as it comes, which is the best that it can do right now. It's hard to predict what the economy will do in the near future, because we're in unusual circumstances. While the United States is recovering, other countries are still in trouble. The Fed is wisely dealing with the immediate problems and leaving the larger, more difficult ones for later. Bloomberg.
FARRELL: The liberal elite relies on distortions and evasions to discredit Edward Snowden. What Snowden revealed raises serious questions about civil liberties and the rule of law, which his critics have systematically failed to address in a coherent way. The National Interest.
PONNURU: Don't expect the spirit of compromise to descend on Washington after the midterm. The parties are just too far apart. Even assuming the Republicans win both houses, the Democrats in safe states who are left in the Senate will filibuster, expecting their party to recover any lost seats in 2016. If they win the Senate, Republicans should use the reconciliation process to pass the most popular parts of their agenda, forcing Obama into a politically damaging veto. The National Review.
COLLINS: A Republican Senate would mean more of the same. More filibusters, more debt-ceiling negotiations, more votes to repeal Obamacare, more dysfunction and more inaction are what we can hope for whether or not Republicans take the Senate. The New York Times.
ALEX NOWRASTEH: Republicans should follow George W. Bush's example on immigration. Reform will lead to victory at the polls for Republicans, who have a long tradition of supporting sensible immigration policies. The Wall Street Journal.
HOLMBERG & SCHMITT: Controlling CEO pay means a long, hard look at what a corporation really is. Once we recognize that CEOs have responsibilities to employees and customers as well as to shareholders, we'll be able to offer them sensible compensation. Democracy.
PACKER: From Kansas to Kobani, there's good news out there if you're willing to look for it. This year has been a year of horrors, but voters are learning from their mistakes and local governments are solving problems that national governments can't. The New Yorker.
If graduates are overly burdened with debt, schools could lose federal funding under new reuls. Some 1,400 for-profit institutions will be at risk for losing federal support under the proposed "gainful employment" rules, which will be released today. Critics say the rules don't go far enough, because they don't account for students who might drop out of a program with debt. Danielle Douglas-Gabriel in The Washington Post.
This is the administration's second attempt to regulate for-profit schools. A federal judge objected to parts of an earlier proposal, and for-profit schools are likely to challenge the new version in court as well. Paul Fain for Inside Higher Ed.
The main difference in this version is that it doesn't consider default rates. Instead, regulators would only consider how much graduates owe relative to how much they're making. Kelly Field in The Chronicle of Higher Education.
Police chief Thomas Jackson will leave his post, but the circumstances and timing are unclear. Law enforcement and community leaders, speaking on condition of anonymity, said Jackson would either resign or be terminated. Sari Horwitz and Wesley Lowery in The Washington Post.
County police would take over management of Ferguson's department, according to one report. An announcement could come as soon as next week, but Jackson himself has said he is not leaving. Evan Perez and Shimon Prokupecz for CNN.
Another option would be to dissolve Ferguson's department entirely. County police would then take responsibility for policing the town, as they do in several neighboring jurisdictions. Mitch Smith and Monica Davey in The New York Times.
Officer Darren Wilson's resignation is also possible. Wilson was the officer who shot and killed Michael Brown, an unarmed young black man, in August, leading to days of violent protests. An anonymous source expects him to "eased out" of the department along with the chief. Trymaine Lee for MSNBC.
You can stop worrying about the national debt. Moody's has announced that the country's finances are "relatively healthy" after several years of hacking at the budget with rusty scissors. Lori Montgomery in The Washington Post.
Republicans are set for major victories in state houses. They are poised to take control of more state legislatures than ever. State government has become especially consequential with federal policy stymied, and states have been setting ambitious new policies on everything from gun control to immigration. Reid Wilson in The Washington Post.
Boehner's job is about to get harder. The new House G.O.P. caucus will be even more conservative than the current one after the midterm. If Republicans take the Senate, many in the House will want to pursue a conservative agenda aggressively -- but they'll inevitably become frustrated when Democratic filibusters and Obama's veto interfere. Jay Newton-Small in Time.
In the South, Democrats are reminding blacks why they should vote. Republicans accuse national Democratic groups of race-baiting with stark imagery and violent suggestions, while Democrats point to the G.O.P. record on issues such as voter identification. Jeremy Peters in The New York Times.
Flying to space on the cheap is not a good idea. A contractor's unmanned cargo rocket exploded seconds after launch in Virginia Tuesday night. No injuries were reported, and the cause is still unknown, but the contractor has drawn criticism for relying on 50-year old Soviet engines that have begun to age. Andrea Peterson in The Washington Post.