The Federal Reserve, On Avalanche Patrol

http://markdow.tumblr.com/post/116263207105/the-federal-reserve-on-avalanche-patrol

“In short, if the risk is overheating, you want to influence the cost of economic borrowing. If the risk is financial stability, you want to affect the cost of leverage. In this case, the policy rate is the place to start because it controls the cost of leverage, whereas encouraging a steep yield curve by first letting the book run off adversely hits the cost of borrowing.”

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