The asset-rich, income-poor economy

http://ift.tt/eA8V8J Economist Richard Koo diagnosed Japan's crash in the early 1990s and subsequent two decades of economic malaise as a "balance-sheet recession." That conclusion wasn't lost on the Federal Reserve during the financial crisis of 2008-09. The Fed engineered an emergency response to craft what can best be described as a balance-sheet recovery. At its policy meeting earlier this week, the Fed made clear that it's scarred, if no longer scared, by the crisis. While the Fed's monthly asset purchases will decline, short-term interest rates will remain pinned near zero.



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