In this article Ben Bernanke says that the Federal Reserve will take steps to avoid the nation going into a "self-reinforcing price decline". The article specifies that there are three ways that the fed could prevent this. One is that the Fed could purchase more long-term securities. The second is that they could keep their benchmark interest rate near zero, and convince investors that it would stay there for a long period of time. And finally they could reduce the interest rates they pay banks to keep reserves.
If the Fed takes these steps, what sort of effect will it have on the national debt?
ReplyDelete