The Unnatural Rate Hypothesis by Krugman

But what I found striking was Hiatt’s offhand explanation of why his never-changing, never-right prediction keeps not happening; it’s because

the Federal Reserve is gobbling up U.S. debt to keep interest rates low

Clearly, this has become part of the CW. And once again we see how a highly dubious economic idea can become part of what Everyone knows and Nobody disagrees with, even if in this case Nobody includes a fellow by the name of Ben Bernanke, who gave a speech on this very topic just a few weeks ago. 

In fact, the notion that rates are low just because the Fed is buying up debt is wrong on at least three levels. 

First, as Bernanke stressed, long-term interest rates have moved very similarly across a wide range of countries, including countries where the central bank is buying up lots of bonds and countries where it isn’t. Here, for example, is a comparison of the US and France:

Monetary Policy and the Global Economy by Ben Bernanke

The London Whale and the real link between the US economy and Cyprus by Dean Baker

LAWRENCE SUMMERS, AXEL WEBER, MERVYN KING, BEN BERNANKE, OLIVIER BLANCHARD AT THE LSE: "I DO NOT BELIEVE THE LONG RUN CAN BE CEDED TO THE AVATARS OF AUSTERITY" WEBLOGGING by DeLong