The Fed Plan and the Credit Crunch

The Federal Reserve Board announced this week that it will inject another $1 trillion into the financial system. (The article on the announcement from the Wall Street Journal can be found at http://www.nytimes.com/2009/03/19/business/economy/19fed.html?_r=1). John Cochrane at the University of Chicago offers an analysis of why this may not work. His note was written in October but applies to the recent announcement as well.