It pertains to the tapering of QE and what affects he believes the tapering affect will have on credit within the economy.
Here is an excerpt.
Now, I do not view the point forecasts of nominal Gross Domestic Purchases as the Gospel. But I do believe that the projected rising trend in the growth of the sum of Fed and depository institution credit does portend a rising trend in the growth of nominal Gross Domestic Purchases. Moreover, I believe that my growth projections of the sum of Fed and depository institution credit are very conservative. Given the capital-raising campaigns undertaken by U.S. depository institutions in recent years, given the diminished uncertainty about future regulatory capital requirements and given the rising trend in residential real estate prices, I believe that depository institutions are more able to step up their credit creation. Lastly, if I have erred in my projection of Fed credit, I suspect I have erred on the side of restraint. It is not a done deal that the Fed will commence a tapering in its securities purchases in the December 2013 or January 2014, as I have assumed, especially given how low consumer inflation is. For example in the three months ended October, the All-Items CPI increased at a compound annualized rate of 0.8%; the CPI ex Food & Energy at 1.5%. If the Fed were to delay its initial round of tapering until March 2014, it also would likely delay its second round of tapering – i.e., initiating an additional amount per month of reduced securities purchases – until after July 2014.
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