"Lets monetize the deficit!" -- Ezra Klein

[ASH]

From this Op Ed in the Washington Post:

"I'm worried," says Alan Blinder, a former vice chairman of the Federal Reserve's Board of Governors. "I'm quite convinced that it'll be a lot less effective than the first time we did this, and that makes me worried that it won't be very effective." That's because the last round of QE worked very differently: The Federal Reserve bought mortgage-backed securities at a time when the market for them was frozen. That created liquidity where there wasn't any. Now they're planning to buy long-term Treasury bonds that are already in high demand. They're creating liquidity, in other words, where it already exists.

But there's one player who could move that money into the economy: Congress. Lawmakers have taken themselves out of the game amid concerns that more deficit-financed stimulus will increase interest rates. The Federal Reserve's purchases will ensure that won't happen. Someone, however, has to convince Congress of that, particularly now that the very concept of stimulus has become polarizing. Someone like, say, Ben Bernanke.

... until it does.

[sunskyfan]

Re: "Lets monetize the deficit!" -- Ezra Klein

Congress are Republicans and Democrats. Republicans still think that Capitalism is a virgin, the government is evil, and there is no such thing as neutral public policy. Democrats think Capitalism is their Father trying to convince them to get a real job, the government is about justice, and public policy is about counterbalancing our lizard brains. Oh, and they are all about getting re-elected. Wise economic policy to save the economy coming out of a compromise between these folks. You have to be kidding.