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The US economy has been weak despite all of the stimulus. Respectfully, why would continuing policies that are meant to counteract emergency conditions help?

by irln 11y ago

dragonwriter 11y ago
The fact that monetary stimulus (a fairly weak tool; fiscal stimulus, which is Congress' domain, is the stronger tool) is insufficient to move things as far in the right direction as desired does not imply that backing off on monetary stimulus would fail to move things in the wrong direction.
- irln 11y ago
  Not sure I follow? The Fed has added +/- 3.6 Trillion to their balance sheet since the start of the great recession.[1] Excess reserves for banks went from 0 to +/- $2.5 Trillion during the same period. [2] The FED arguably brought us back from the brink but I would think that those emergency measures are for emergencies not to be used because things are "weak" but when things are on the "abyss". One person's opinion. [1] https://research.stlouisfed.org/fred2/series/WALCL https://research.stlouisfed.org/fred2/series/WALCL [2] https://research.stlouisfed.org/fred2/series/EXCSRESNS https://research.stlouisfed.org/fred2/series/EXCSRESNS
TheCowboy 11y ago
Stimulus isn't a switch you flip on and off. The idea that if you flip it, and the economy doesn't take off then stimulus doesn't work, is not a sound idea. You can have stimulus in different forms, different points of time, and different levels. So why would continuing policies meant to help? Because discontinuing them would have a significant detrimental impact. Based on this point of view, stimulus and monetary policy have no effect, so the financial crisis should have been left to run its course. That would have been a terrible outcome, and we would be worse of than we are now.
- irln 11y ago
  My point is continuing extraordinary measures for seven years is contra to what these measures were initially articulated to address (e.g. emergency conditions != weak conditions).

The US economy has been weak despite all of the stimulus. Respectfully, why would continuing policies that are meant to counteract emergency conditions help?

by irln 11y ago

The US economy has been weak despite all of the stimulus. Respectfully, why would continuing policies that are meant to counteract emergency conditions help?

dragonwriter 11y ago

The fact that monetary stimulus (a fairly weak tool; fiscal stimulus, which is Congress' domain, is the stronger tool) is insufficient to move things as far in the right direction as desired does not imply that backing off on monetary stimulus would fail to move things in the wrong direction.

irln 11y ago
Not sure I follow? The Fed has added +/- 3.6 Trillion to their balance sheet since the start of the great recession.[1] Excess reserves for banks went from 0 to +/- $2.5 Trillion during the same period. [2] The FED arguably brought us back from the brink but I would think that those emergency measures are for emergencies not to be used because things are "weak" but when things are on the "abyss". One person's opinion. [1] https://research.stlouisfed.org/fred2/series/WALCL https://research.stlouisfed.org/fred2/series/WALCL [2] https://research.stlouisfed.org/fred2/series/EXCSRESNS https://research.stlouisfed.org/fred2/series/EXCSRESNS

TheCowboy 11y ago

Stimulus isn't a switch you flip on and off. The idea that if you flip it, and the economy doesn't take off then stimulus doesn't work, is not a sound idea. You can have stimulus in different forms, different points of time, and different levels. So why would continuing policies meant to help? Because discontinuing them would have a significant detrimental impact. Based on this point of view, stimulus and monetary policy have no effect, so the financial crisis should have been left to run its course. That would have been a terrible outcome, and we would be worse of than we are now.

irln 11y ago
My point is continuing extraordinary measures for seven years is contra to what these measures were initially articulated to address (e.g. emergency conditions != weak conditions).