Pejman Yousefzadeh

I find less to this story than meets the eye. We have known for a while that the Federal Reserve is committed to using monetary stimulus in order to try to speed up economic growth—and job growth along with it—so there is little about the story that comes as a surprise. (For the record, I support monetary expansion and have for quite a while now.) The Fed has made it clearer that it is interested in using nominal GDP targeting in order to guide policy, but it is also indicating that it is reaching the limits of its power and authority to be able to positively influence the economy. And as everyone ought to be aware, nothing the Fed does will help ameliorate the devastating effects on the economy that we will witness if talks between the president and Congress fail, and we go over the fiscal cliff. (Incidentally, the fact that Democrats state that they are willing to go over the cliff ought to be treated as a scandal; I can’t remember the last time I heard one political party—and the president who belongs to that party—state so clearly and unequivocally that they are willing to bring about a recession if they don’t get their way in budget negotiations. And these people have the nerve to call Republicans “hostage takers.”)