Just out, another Federal Reserve Bank of San Francisco Economic Letter featuring another model.
Here is the effect on employment, it suggests, of the $1.72 trillion the US Central Bank has spent buying up various assets since 2008:
That is, the buying spree will have lowered unemployment by a point and a half by (important bit this) 2012. Or, in other words, the Fed will have created 3 million jobs. Nice.
Course, that does pan out to $573,000 (keep the change) per job. But this was not just about jobs was it? D-E-F-L-A-T-I-O-N!
No fear - once establishing that that particular threat is fully under control the authors produce this beautiful section of economic prose-hedging:
"The simulations also suggest that the longer-run inflationary consequences of the program are likely to be minimal, as portfolio-balance effects rapidly fall to zero and conventional monetary policy adjusts to bring conditions back to baseline. In part, this long-run neutrality reflects that agents in the model have confidence in the FOMC’s determination and ability to maintain price stability—a belief that policymakers ratify."Que? Whatever - it's all good - bring on QE3, baby.