Can Bernanke Really Save Us?
The drumbeat for Ben Bernanke to save us is getting louder from Democratic pundits. Brad Plumer at Ezra's place:
So can anything break the economy out of its current doldrums? If natural forces aren’t going to produce a fast recovery, Smith argues, then the Federal Reserve has to step in: “The Fed has to say that it will tolerate more inflation or will be more heavily focused on unemployment. This way folks engaging in long term projects will know that even if the economy picks up they can still expect to experience low financing costs.”
It can't hurt I suppose, but really, didn't we all agree that in a zero lower bound environment, aren't the Fed's tools of limited utility? Isn't government spending to boost aggregate demand the only real tool that works here? Karl Smith, who owns up to a missed call on the economy recovering (he thought a strong recovery was forming in the winter) writes:
|< Monday Morning Open Thread | Stand Your Ground Law Infographic >|