Thứ Ba, 10 tháng 5, 2011

Three Economic Things That Do Not Exist

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Robert Waldmann said...
Those facts also make the case for a unicorn cavalry charge as strong as it has been in your life time. They can only imply that the Fed should implement an expansionary monetary policy if it is possible for the Fed to implement an expansionary monetary policy.
At the moment the Fed is nearing the end of the second larges program of open market operations in its history. The graphs show no reason to fear expansionary monetary policy, but also no sign that current monetary policy is pushing much harder for expansion than it ever did until 2008.
You note that the labor market isn't recovering adequately and your third graph shows that from the time the Fed started trying harder than ever before 2008 to drive down long term safe interest rates, long term safe interest rates have gone up (to be fair the real interest rate is the one that matters and it has stayed the same).
You say the Fed can and should implement a more expansionary monetary policy. The data you present suggest that the Fed can't and should do so, and can't plus should adds up to can't.
The fact that the arguments of people who say Fed policy is too loose are clearly utter nonsense doesn't mean things would be much better if Fed policy were looser. The plain fact that the Fed shouldn't pull on its rope doesn't mean it will achieve much of anything by pushing harder.
You quote Krugman at length but you suppress two words
I see two feasible alternatives expansionary fiscal policy or persistently high unemployment. I see only one outcome which is economically and politically possible.

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