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Again, a blank assertion that is in truth contentious. I apologize for my tone, but it frustrates me when armchair economists comment on the internet and phrase
by tedsanders 10y ago
Again, a blank assertion that is in truth contentious. I apologize for my tone, but it frustrates me when armchair economists comment on the internet and phrase opinions as facts. It is not at all an established, consensus fact that the US Government lost control of monetary policy after 2008. In fact, quantitative easing and interest on reserves are two policy levers that central banks continued to pull after hitting the zero bound. Short-term interest rates are not the only tool, nor the only framing, of monetary policy.
- marcosdumay 10y agoWell, I'm not taking that point, sorry. Quantitative easing was tried, and didn't work. There was nobody to lend money to, so velocity felt in proportion to the new money printed and the whole thing turned into just a hidden bank subside. It may work if coupled with the correct fiscal policy (AKA a temporary universal income), but nobody on the US government has the power to do that. Interest on reserves is a fringe monetary instrument that is getting support from economists out of desperation. The leading theory is that it doesn't work at all, the fringe theory that everybody is hoping to be right is that it can work if the government restricts the use of paper money. AFAIK, nobody has any idea on what unexpected effects can come from doing it for any long period. Interest rates are not the only tool, but the US government has already spent all of the orthodox tools. In fact, I do think the lest one to stop working was quantitative easing.