How QE works. Ed Harrison.
QE and the term structure of rates. Warren Mosler.
summary: if the market thinks QE will work, then the economy will heat up over time and inflationary pressure will build so the Fed will need to hike rates, and the term structure of rates reflects more Fed hikes down the road; if the Fed ends QE, the market place will deem that as the Fed removing support from the economy, and this less stimulative policy will mean a relatively weaker economy and less inflationary pressure so fewer future interest rates hike --- and the curve will respond appropriately
QE and the term structure of rates. Warren Mosler.
summary: if the market thinks QE will work, then the economy will heat up over time and inflationary pressure will build so the Fed will need to hike rates, and the term structure of rates reflects more Fed hikes down the road; if the Fed ends QE, the market place will deem that as the Fed removing support from the economy, and this less stimulative policy will mean a relatively weaker economy and less inflationary pressure so fewer future interest rates hike --- and the curve will respond appropriately
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