For the past two years or so, Washington has pumped almost 6 trillion dollars of deficit spending into the so-called US economy.
Yet after this staggering bout of mind-boggling unprecedented stimulus, the Federal Reserve still can’t decide when it should begin tapering its bond buying program — much less try to move away from the notorious zero lower bound on interest rates.
Can someone tell me what monetarist textbook this insane policy is based on?
Can someone tell me why, despite the fact that Washington is running both fiscal and monetary policy at full-bore open throttle, inflation is barely registering on the dial and wage employment continues to falter?
Bonus points, if you can explain the implications.