Bill Cheney Starts Quotations

I don't think we can discount the legitimate concern that the Fed has been pumping too much liquidity into the economy. It may be that they have to backpedal furiously as the economy starts to recover. Inflation has been down for so long, it may be hard to imagine it ever getting back up -- but you better believe it still can.

If unemployment sticks at about 6.0 percent and starts coming down, the Fed will probably feel it has to start tightening fairly soon.

Monetary policy is the perfect instrument for these circumstances. The Fed can keep pushing as needed, but still can turn on a dime and pull back as soon as spending starts to rebound.