One positive take away from the stream of commentary regarding the timing of Federal Reserve interest rate hikes has been the recognition of the current state of and impact on economic activity of government spending.
Despite our best efforts to demystifying and decouple the false government equivalent to household budget analogy held by politicians and the public is still prevalent. This is especially harmful as the simplest effort in supporting the necessary investment in public goods like infrastructure, education and social programs is for policy makers to recognise the net effect not being a generational burden but an asset.
In the absence of this more complicated measures have entered into the public discourse most prevalently the "QE for the People" proposals. While QE hasn't yet been extended to include Fed purchases of infrastructure or clean energy investment bonds because bills have not been proposed. These efforts to pump money directly into actionable measures represents an idea whose time will come and perhaps reasonably so.
In the meantime we plod along documenting developments here.
A few examples beginning with Robert Kuttner: Are We Asking Too Much of the Federal Reserve—or Too Little? writing in the American Propect
"The larger issue, which is getting submerged in the great debate about raising rates, is that monetary policy should not be the only game in town.
Normally, in a soft economy, the government would be using fiscal as well as monetary policy. But because of the obsession with deficit reduction—unfortunately shared by the Obama administration (remember the Bowles-Simpson Commission?)—fiscal stimulus today is off the table; worse, deficit-reduction is contractionary. In plain English, prolonged deficit-cutting slows down growth.
With fiscal stimulus ruled out politically, pressure is on the Fed to be the sole engine of growth. Yet the central bank can only do so much."
NPR's Tom Ashbrook produced an excellent dialogue in its discussion titled "Should The Fed Raise Interest Rates?"
Despite our best efforts to demystifying and decouple the false government equivalent to household budget analogy held by politicians and the public is still prevalent. This is especially harmful as the simplest effort in supporting the necessary investment in public goods like infrastructure, education and social programs is for policy makers to recognise the net effect not being a generational burden but an asset.
In the absence of this more complicated measures have entered into the public discourse most prevalently the "QE for the People" proposals. While QE hasn't yet been extended to include Fed purchases of infrastructure or clean energy investment bonds because bills have not been proposed. These efforts to pump money directly into actionable measures represents an idea whose time will come and perhaps reasonably so.
In the meantime we plod along documenting developments here.
A few examples beginning with Robert Kuttner: Are We Asking Too Much of the Federal Reserve—or Too Little? writing in the American Propect
"The larger issue, which is getting submerged in the great debate about raising rates, is that monetary policy should not be the only game in town.
Normally, in a soft economy, the government would be using fiscal as well as monetary policy. But because of the obsession with deficit reduction—unfortunately shared by the Obama administration (remember the Bowles-Simpson Commission?)—fiscal stimulus today is off the table; worse, deficit-reduction is contractionary. In plain English, prolonged deficit-cutting slows down growth.
With fiscal stimulus ruled out politically, pressure is on the Fed to be the sole engine of growth. Yet the central bank can only do so much."
NPR's Tom Ashbrook produced an excellent dialogue in its discussion titled "Should The Fed Raise Interest Rates?"
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