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2011-08-25

Jackson Hole will be a Black Hole for Those Hoping for QE3

Market Bets on Fed Miracle var rubriken på denna blog 2011-08-24

Hope still springs eternal in the financial markets, where there remains the perennial hope that the Fed will “do something.”

/But/ The problem is a failure of demand which has to be addressed via demand measures – that is, fiscal policy.

Auerback/Parenteau August 25, 2011

Today’s growing economic malaise is unsurprising to those of us who viewed the upturn in the global economy in the aftermath of the Lehman bankruptcy largely as a consequence of the coordinated fiscal expansion that was undertaken at that time,
NOT the embrace of “quantitative easing” or other forms of monetary policy ‘stimulus’.

By the same token, it is equally easy to see the current accelerating downturn as a product of the premature withdrawal of said stimulus.

A number of commentators and policy makers have shifted focus back to monetary policy.

It’s hard to see why this should work out any better than QE2 or other variants of quantitative easing tried before.

Notwithstanding the evidence, hope still springs eternal in the financial markets, where there remains the perennial hope that the Fed will “do something.”

The fact that the markets are now calling for more monetary stimulus (even as most quail against any additional fiscal stimulus on the misguided grounds of “national insolvency” ) simply reflects the intellectual cul de sac at the heart of most mainstream economics, with its manifestation of the neo-liberal bias towards monetary policy over fiscal policy.

What will motivate consumers to borrow if they are scared of losing their jobs?

Why would a company borrow if they expect their sales to be depressed?

The problem is a failure of demand which has to be addressed via demand measures – that is, fiscal policy.

Full text

Jag tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken
Rolf Englund blog juli 2011 och tidigare


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