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The ‘steamroller’ effect of housing policy

Commentary: Don't let ignorance shut down the Fed

The formation and execution of economic policy this week entered a new level of chaos, complete with good news, bad news and silly news. The best news: Two different federal-deficit study groups came up with the same basic solutions: Cap spending and revenue at a sensible level of gross domestic product, broaden the tax base by cutting special exceptions, and cut tax rates. Spending, in Alan Simpson's words: "Harpoon every whale in the ocean." The people are way ahead of political leadership, with the average American eager to implement any deal like these two. Then, the chaotic: QE2 (the Federal Reserve's second round of quantitative easing) for now is a complete and counterproductive bust: 10-year T-notes have blown near 3 percent, and mortgages have risen to 4.5 percent. Only a handful of people think they understand QE, and the more Federal Reserve Chairman Ben Bernanke has talked about "raising the inflation rate," the more he has spooked the bond ...

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