Good news: welcome to the first chairwoman of the Federal Reserve.

As is every single right wing pundit to whom you listen. Not one of them is interested in common ground or compromise.

 

None of this is a bad thing though.

 

What do you mean? GDP growth saw an impact from the sequester. In terms of the various components of GDP growth, government spending and employment has generally been a drag. Not sure what the deflation you're talking about is.

Absolutely, though I don't think either Yellen or Bernanke are necessarily Republicans or Democrats. The Fed has made good decision after good decision and helped the economy recover while the rest of government has been mediocre at best.

Why? The two things aren't necessarily contradictory. More stimulus might have helped the economy further and required less Fed action or quickened the pace of recovery. Or it could have led to additional inflation and caused problems. We don't really know for sure either way at this point. QE and government spending both provide stimulus but target different parties and flow through the economy differently.

 

Except for when you're in a liquidity trap/up against the zero lower bound.

This is all pretty well documented by the last several years.

Quantitative easing was a hedge against deflation/low flation. If you'd coupled it with a more serious fiscal policy, we'd be much better off and the *permanent* damage that depressionshe cause would have been avoided.

Instead we had monkeys worrying about an imaginary budget crisis.

 

How does the republican party react to the good economic news?

With silence (party before country).

GOP greets economic news with total silence

For those hoping to see the American economy succeed, there are a lot of reasons to smile this morning. Economic growth is at an 11-year high. Job growth is at a 15-year high. The stock market is soaring. Wages are rising. Gas prices are plummeting. American manufacturing is improving. The uninsured rate is dropping.

President Obama is boasting about “America’s resurgence,” and in a twist, the public may be starting to believe him.

And this got me thinking: what’s the Republican response to all of this?

As we discussed earlier, GOP officials have been heavily invested in a simple proposition: the combination of the Affordable Care Act, federal regulations, Dodd-Frank reforms, and higher taxes approved last year are a brutal “wet blanket” on economic growth. Obama’s entire agenda has been a disaster for the economy, they argue, and if we want conditions to improve, we’ll have to do the exact opposite of what the White House has done.

So, what’s the Republican reaction to the latest GDP numbers, for example?

Nothing.

 

Oil prices have collapsed partly because of the strong dollar.

 

The Fed for the past five years disagrees. Deflation in a debt burdened economy can be very bad. That was the purpose of the three rounds of quantitative easing.

 

Deflation is bad period.

However the fall of the price of one commodity (or multiple ones) is not deflation, not even a huge market like oil.

 

People were saying we'd go into recession and deflation without more stimulus. Instead, we had a sequester and the economy grew. This was because of FED easing.

Now people are trying to argue that our recovery would have been stronger. Making the fiscal argument unfalsifiable.

Krugman already admitted he was wrong on the deflation front. Eventually he may do the same on fiscal stimulus.

 

Monetary policy is effective when up against the zero bound, but it has to be a permanent expansion of the money supply.

The budget is a real long term problem. Krugs has admitted this. He just said we should deal with it later.

 

A drop in oil prices is not deflation. It's a change in a specific commodity price. If there was deflation of the dollar, everything would be cheaper.

 

Except the Fed itself said it had to continue QE in part due to bad fiscal policies (ie, the sequester). From May 2013, a few months after sequestration went into effect:

http://www.forbes.com/sites/afontev...ss-and-obamas-sequestration-for-slow-economy/

As expected, the Fed will continue to buy $40 billion a month in residential mortgage-backed securities and $45 billion in Treasuries in order to keep, and push, interest rates down in order to monetarily support the economy, the FOMC announced on Wednesday.

In their statement, FOMC participants spoke of “moderate” expansion in economic activity and continued, albeit slow, improvements in labor market conditions. The Fed recognized the economy isn’t moving as fast as it would like, blaming Washington directly for that.

“Fiscal policy is restraining economic growth,” the FOMC statement read, referring directly to the impact of sequestration on the economy.

http://www.theguardian.com/business/2013/may/01/federal-reserve-congress-cuts-policy


The Federal Reserve has explicitly criticised budget cuts imposed by Congress, blaming fiscal policy for holding back the US's economic recovery.

After a two-day meeting, the Federal Open Markets Committee (FOMC) said on Wednesday in a statement that despite signs of recovery "fiscal policy is restraining economic growth". The statement is the FOMC's boldest assertion to date that Washington policy is hampering the US's fragile economic recovery. It stands in marked contrast to last month's more cautious statement, which said "fiscal policy has become somewhat more restrictive".

The FOMC released its statement after two key reports suggested that recovery in the jobs market is slowing, as end of year tax hikes and budget cuts – known as sequestration – seem to take their toll.

 

Meanwhile in America: "Economy Surges Forward As GDP Growth Fastest In More Than A Decade"

 

Except that's not what happened wiht QE which was explicitly denoted to be temporary. And of course, using fiscal policy is a much better ROI than this (and actually leads to buying things you need, like roads and such) and has a much shorter term horizon.

But other than being more expensive, and not feasible, you're correct that it's a viable substitute.

umm,ok Well good to see you have endorsed Krugster on both the fraudulence of the budget deficit wars of 2009-2014 and liquidity trap economics - you're New keynesan now, who mystifyingly advocates for worse policies because...Ronald Reagan, or something.

 

There is no way fiscal stimulus is cheaper. Tell me, how much did it "cost"? Look forward to your calculation.

You're also assuming congress can actually make the right spending decisions.

On your second point, I'm less sanguine that we can deal with budget propblems later. The sooner the better. Had we enacted another trillion boondoggle like the libs wanted that's more we have to cut later.

 

Good job MONETARY policy

 

But that's exact my point.

QE can offset fiscal contraction. Fiscal stimulus is irrelevant and unnecessary

 

It's much cheaper in terms of ROI - frankly it's ridiculous to make the argument that infinity of monetary policy is chepaer than short term fiscal policy.

This is due to the rather high value of infinity.

So basically when we were worried about deflation and ****ty demand in the depst of the 2008-2014 depression, the proper thing to do was to penalize everybody living then with bucket-drop spending cuts in order to give a boost to people in 2056.

Honestly, not even deserving of comment.

 

Duct tape can stop a bleeding wound. Bandages, antiseptic & antibiotics are irrelevant and unnecessary.

Ironically, this is the same dumb rhetoric that the austerity clowns in Europe are claiming with regard to tight monetary policy.

It of course caused a double dip recession over there, but now that it is largely over and back to anemic growth rather than contraction - they're playing the same tune you are "see, we didn't need loose monetary policy anyway!"

 

What the heck are you talking about? How expensive is monetary policy? You can't even answer how much QE cost.

Your second point is irrelevant as I supported stimulating the economy. Just not not with wasteful spending bills from congress that make things worse.