The Bernanke Fed and 'Credit Easing' Policies

In the aftermath of the financial crisis the Fed pursued a “near zero” overnight interest floor and initiatives to manipulate the size and composition of central bank assets. Bernanke referred to this policy as “credit easing.” I overview the succession of unconventional Fed measures that have yielded more than a five-fold increase in its balance sheet since September 2008 but with growth below trend. Three areas of concern are highlighted: the distortion of asset prices and interest rates, the Fed as a debt-enabler, and the $2.6 trillion overhang of bank reserves