July 01, 2003

Central bankers eye unusual steps

Central bankers are apparently considering buying up financial assets to "stop deflation":

Designing monetary policy to achieve a targeted inflation rate can be helpful not only to moderate price pressures, but also to boost prices when they fall too low, some said.
"Everybody was very confident about it," Gordon Richardson, former Bank of England Governor, told Reuters after the closed-door session.
"It was a theoretical discussion without any sharp corners," said Matti Louekoski, deputy governor of the Bank of Finland.
According to several central bankers attending the discussion, Federal Reserve Chairman Alan Greenspan said measures once considered unorthodox might become conventional, such as buying financial assets.
"We used to watch only commodity prices, exchange rates and interest rates, but now it seems we also have to examine or monitor asset prices," said one.

Not content with simply pursuing "orthodox" inflationary policies, central bankers are also considering acquiring financial assets with fiat money, thus making an increasing amout of private companies become at least partially state owned. How generous of them...