Both the Federal Reserve and the ECB are now purchasing government debt in large scale. Yet neither of them seem at all eager to admit that they are doing anything unconventional with their monetary policy. In fact, some of the recent statements by both Ben Bernanke and Jean-Claude Trichet are not as straightforward and transparent as they might have been.

In the US, this is probably because of the risk that Congress might actually intervene to stop the Fed from “printing money”. Therefore the Fed has started to make narrow technical arguments which obfuscate what it is really doing. In Europe, the ECB has a strong historical dislike of monetising government deficits, and fears that quantitative easing might be declared contrary to their legal obligations. Therefore they draw very fine distinctions between their actions and US-style QE. In the long run I think that both central banks would be better advised to tell it exactly as it is.

Mr Bernanke has recently claimed that the Fed’s current policy should not be described as “quantitative easing”, a claim I disputed in this earlier post. Over the weekend, he defended the Fed on the grounds that the central bank was not printing money, which has been the accusation levelled at him by many of his Republican critics. Is Mr Bernanke’s claim accurate? Read more