Nick Rowe: If You Set Out to Quantitatively Ease, Then by God, Sir!--Quantitatively Ease!

Normal open market operations swap cash for short-term government bonds, and so affect the short, nominal, safe interest rate. But when the short, nominal safe interest rate is zero, central-bank open market operations are simply swapping one zero-interest safe government asset for another: it is hard to see why they should matter. If the Federal Reserve wants its actions to matter, it needs to swap cash for assets that are not short, nominal, and safe.

Nick Rowe remembers the dictum of...