Just when we were getting our heads around the idea that we're speeding down Fiscal Street and about to go careening off of "fiscal cliff," a new - and similar - risk has been added to the mix this morning.
According to Goldman Sachs economist Jan Hatzius, the Federal Reserve is essentially driving down Monetary Road and there's a good chance we're about to also have an accident at "monetary cliff," following Wednesday's moves that slashed the growth target and extended the rate-rejigging plan called Operation Twist.
What this means is, if there's not an unexpected improvement in the jobs market and economy in the back half of the year, then come 2013, the Fed will have no choice but to lever up and undergo another round of quantitative easing or QE3. If true, it would be a move rife with political, economic and inflationary risks as well as one that might not even work.
"I question how much additional quantitative easing, as well as what the Fed did yesterday, really impacts the real economy," says Jerry Webman, Chief Economist at OppenheimerFunds in the attached video. "I'm not sure there's a lot they can do that's going to really goose the economy at this point."Read More »from U.S. Economy, Market Now Facing a Monetary Cliff