As Fed balance sheet expands, so does "forward guidance"
January 14, 2014
How does the Fed look to Deutsche Bank's chief international economist? John H. Cochrane, Chicago Booth professor and self-styled Grumpy Economist blogger, got a sneak peek from Torsten Slok of a slide deck evaluating the US economy. Cochrane shared three charts ("Sorry, the slide deck isn't public," he notes) including the one below, which shows a correlation between the Fed balance sheet and the number of words in FOMC statements. Both are going up—the "price per extra word," according to the chart, is a cool $6 billion. For two employment-related charts and commentary, read the Grumpy Economist post.