Jousting competition at the tiltyard, April 16, 2012, at The Royal Armouries, Leeds in England (Shutterstock)
Jousting competition at the tiltyard, April 16, 2012, at The Royal Armouries, Leeds in England (Shutterstock)

Carrdiff Garcia of the Financial Times' Alphaville responds to Berkley professor Brad DeLong, here. DeLong issued forth a challenge to meet on the field of intellectual combat for Garcia to explain just what are, precisely, the risks of quantitative easing (QE). In his response, Garcia argues that Fed purchases of Treasuries soak up assets that can be used for collatoral, creating a potential constraint on the financial system. (Although he raises other risks, Garcia seems to suggest that collatoral is the issue that  poses the greatest threat.) It is noteworthy, however, that Garcia sees no alternative to QE, notwithstanding the risk. I strongly suspect that Ben Bernanke and his colleagues are well aware of these risks, so too DeLong, but are balancing them against the risks of inaction. So, at the end of the day, there really isn't much of a debate — and certainly no duel over intellectual honour.

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