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April 24, 2011

Fed's Monetary-Policy Stimulus Mostly A Failure, Economists Say

This would be the quantitative easing stimulus (buying federal debt with freshly-printed dollars -- yeah, my mind loses the plot with that double-abstraction too), not Obama's trillion dollar fiscal stimulus.

The bad news: We've tried all of the usual government interventions to wake the economy up and they've all failed.

The possibly good news for those of this mindset: That pretty much only leaves some combination of cutting spending and possibly cutting taxes as the untried and yet-unproven-to-have-failed option.

I say that's only possibly good news because 1) that could never happen until 2012, assuming all things work out for us politically (including winning a near-supermajority in the Senate), which means at least another two years of economic misery, and 2) the recession's resistance to other conventional responses suggest it might be resistant to all responses, including the conservative ones.

Story here.

The Federal Reserve’s experimental effort to spur a recovery by purchasing vast quantities of federal debt has pumped up the stock market, reduced the cost of American exports and allowed companies to borrow money at lower interest rates.

But most Americans are not feeling the difference, in part because those benefits have been surprisingly small. The latest estimates from economists, in fact, suggest that the pace of recovery from the global financial crisis has flagged since November, when the Fed started buying $600 billion in Treasury securities to push private dollars into investments that create jobs. Bernacke will publicly explain/defend his policies on Wednesday.

Thanks to Andy.


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posted by Ace at 11:40 AM

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