When a former Fed Reserve Chairman and a [recovering Keynesian] Fed economist sound the alarm, one should take heed.
At a time when foreign countries own trillions of our dollars, when we are dependent on borrowing still more abroad, and when the whole world counts on the dollar’s maintaining its purchasing power, taking on the risks of deliberately promoting inflation would be simply irresponsible.
Until the press, the public, and policy makers understand the utter unreliability of macroeconometric estimates of the impact of policies on employment and growth, the answers provided by the usual suspects are worse than nothing. They give policy makers the illusion of precise control over the economy, based on methods that are no more reliable than soothsaying or entrail-reading.
Interesting Graph: Share of Total Wealth Gain, 1983 – 2009 (Source: Economic Policy Institute)
Related Graph: Effective Federal Funds Rate, 1983-2009 (Source: St. Louis Fed)