The Fed: Creates bubbles by keeping interest rates exceptionally low for long periods. "Fixes" bubble bursts by....keeping interest rates exceptionally low for long periods. If you can do these 2 things that are 1 thing and want to be Fed Chief, raise your hand! Bonus - eat for free in the Fed cafeteria and use the Fed facilities so you don't see the effects of inflation on food/basic staples.
Actually the EU is currently taking an austerity approach to extracting themselves from high debt and high unemployment. It is not working well of course. They need to follow Keynes, and there is increasing pressure to model their monetary policy after the U.S. Fed. I think you will see them move more and more in that direction over the next 18 months or so. Soros recently spoke in Frankfurt suggesting that either Germany should drop its objections to the Euro bond or else leave the Euro. Keynes advocated something quite different from what the Europeans are doing currently. And he advocated different policy in boom times than in recessions.
Read Griffin's remarks again. I think you will agree that while your points make sense, his do not. Maybe you should be in charge of Citadel.
The wealth effect isn't working. Real estate hasn't inflated, appreciably. Equities have, but 80% of Americans own a measly 7% of all financial wealth. The rest went into commodities - energy, industrial metals, agricultural products - which inflated the real CPI, dramatically. As a Keynesian, you would know increasing factor input costs shifts the supply curve left-ward, pushes up the price level, and causes a reduction in GDP/employment. Iow, prices rise, and wages remain stagnant = drop in living standards and employment. So his analysis is right. All the QE, while propping banks, and staving off the inevitable Great D 2.0, eroded living standards and destroyed jobs by inflating supply costs. That's the problem. The Fed has a broad sword, but it can't dictate which asset classes that money flows into. In this case, under these circumstances, the desired effect (reflating the housing bubble), wasn't achieved. Now, actually consider why that's a good idea, when the last one just popped with disastrous consequences?!?! What isn't discussed, is the other side of that equation - wages. Wages are in decline. Offshoring, H1B and illegal "migrant" labor exerts massive downward pressure on wages. Take any metric, but good jobs are far fewer, shitty jobs are more prolific, and hours are being cut. The result - wages are in decline and prices are rising. So ya, consumption has taken a massive hit, so output is down, along with GDP etc. While the FED is more responsible for escalating supply costs, it's Congress that's to blame for destroying wages. And the idea that technology kills jobs is bogus. If that were true, nobody would have a job. Technology has evolved considerably since cave-dwellers invented the wheel 100,000 years ago. And here we are. Most people, with a job. Strange?
At least we know who voted for option two in the poll. I knew it was either him, or the other Fed Apologist, Martinghoul.
Honestly, I would really love for someone to show me how QE helps job creation, and thus spurs employment.
Good article in yesterday's WSJ about how it's 'quaint' that many still believe the government can help. The argument being of course that pretty much everything the government does, especially when relating to big problems, usually makes things worse. So the usuals screams of 'the govt MUST do something' should be replaced with 'PLEASE, stay the hell out'.