Opinion

Felix Salmon

Bernanke can’t solve our problems

By Felix Salmon
November 4, 2011

7-Sumner.gif

Many thanks to Joe Weisenthal for throwing some much-needed cold water on the NGDP fandom which is currently sweeping the blogosphere.

I’m a fan of NGDP myself; I was one of the 37% of econobloggers who voted for it in the Kauffman survey this quarter. But the fact is that switching to NGDP targeting would be a decidedly marginal move: the Fed is, simply, out of credible ammunition right now. And so Ben Bernanke is being rather sensible when he says that if you want to create jobs, then fiscal policy is going to be a lot more effective than monetary policy.

If you want a good introduction to NGDP, Christy Romer helpfully provided one in the NYT last week. But at heart, the argument seems to go a bit like this:

  1. The Fed should say that it expects the economy to grow more.
  2. Then everybody else will expect the economy to grow more.
  3. Then the economy will grow more!

Ramesh Ponnuru and David Beckworth actually say this, pretty explicitly, when they talk of how “the mere announcement that the Fed will buy assets until nominal spending hits a target, for example, could raise expectations for nominal-spending growth”.

But what’s missing here is the actual mechanism by which the Fed will change expectations about the state of the economy. In the latest issue of the Milken Review, which is stupidly behind a registration wall, Clark Johnson has a 10-page article (idiotically enormous 46MB PDF alert) complaining about how the Fed isn’t doing enough to jumpstart growth. It’s full of stuff like this:

Monetary policy works best by guiding expectations of growth and prices, rather than by just reacting to events by adjusting short-term interest rates… Instead of assuring the market that growth will be restored, the Fed has set interest-rate targets or promised to undertake specific volumes of open-market operations over defined periods. Much more could be done to create the expectation that the liquidity needed to sustain high rates of growth would be provided.

Johnson quotes Lars Svensson, deputy governor of Swedish Riksbank, admiringly:

It is now generally acknowledged that monetary policy works mainly through the private-sector expectations of future interest rates and future inflation that central-bank actions and statements give rise to. Those expectations matter much more than the current interest rate. That is, monetary policy is “the management of expectations.”

Well, OK, it’s hard to oppose managing expectations so that everybody believes that we’re going to have strong growth going forwards. But the Fed already has a full-employment mandate, and it’s clearly failed at that. Simply announcing that you’re working towards some stated end can be a good idea — but only if you can credibly meet that end. And it’s far from clear that the kind of things that Romer and Johnson are talking about — extensions of QE, basically, in one form or another — would suffice to get nominal growth back to where Romer would like to see it.

QE’s been good at goosing markets; it’s been less good at goosing the economy as a whole. And yet the likes of Ryan Avent are seriously disappointed that Bernanke hasn’t done, um, “something”.

Here, then, is Joe:

The biggest problem facing the economy is that the private sector is in too much debt. Americans are trapped in their homes, where they owe huge mortgages, and are generally paying off the big credit boom from the last few decades…

If you can accept that this needs to come down, it seems ludicrous to think that the answer to the debt crisis is: cheaper loans! People don’t want (and can’t utilize) cheaper loans: What people need is more income to pay off this debt.

And there’s a place that more income can come from, and that’s government spending…

The real impediment to wage inflation isn’t that the Fed hasn’t set a big enough number, it’s that we have massive unemployment and excess capacity creating slack in the labor market. Get rid of that slack by putting people to work doing anything, and you start to get the wage firmness (inflation) you desire.

And beyond that, it’s just intuitive. If you take the average person, ask them what will cause them to spend more money: A policy announcement from Bernanke, or the promise of a well-paying job for years to come. The answer is obvious.

Sadly, there’s zero chance of the kind of fiscal stimulus which can actually put millions of unemployed Americans to work. Obama, it turns out, is no FDR. And without strong backing from the White House, the Fed simply doesn’t have the credibility needed to make everybody believe that we’re emerging into a halcyon world of strong growth and high employment. Because, frankly, we’re not. No matter what Bernanke does.

Comments
36 comments so far | RSS Comments RSS

We probably disagree a bit on FDR (I suspect I think he looks more like Hoover than you do), but that aside, FDR’s jobs programs were pretty low-tech. Sure, the civil/structural engineering piece was critical, but I think the steepening of the skills-productivity curve plus globalization over the last century has made a New Deal employment expansion fairly impossible. I agree that NGDP is not a magic bullet. But a negative interest rate regime seems worthy trying. My bigger fear is that Obama will be more like Carter than Reagan, if and when inflation pops.

Posted by caveatBettor | Report as abusive
 

“the mere announcement that the Fed will buy assets until nominal spending hits a target” AKA “The price of real estate always go up – we’ll all be rich, rich, rich selling houses to each other!!!!”

With study after study showing stagnant wages, greater poverty, decreasing consumer spending power for the 99%, what is this belief that if we only have “the FED” conjure money and raise prices, we will all be better off? How does this theory work in real estate – keep house prices high, increase unemployment, and more houses get sold?

We have had FED worship for about 30 years now, and it appears to have dug us into a big hole.

Posted by fresnodan | Report as abusive
 
 

Felix… you and Paul Krugman need to cut Obama some slack. FDR didn’t have to deal with Fox news, Right wing talk radio, and most imporntantly a permanent standing army of lobbiests working every day to further the goals of the “1%.”

Barak is pure of heart though… after he wins his last election the deplomacy will end. The governing from the middle will cease. Barak is a legal scholar he realizes that controling 1 house of congress and the presedency you can get whatever you want in the 2nd term if you’re willing to throw your veto around.

To meaningfully raise taxes on the rich remember all he has to do is NOTHING. They all sunset 12/31/12!

Posted by y2kurtus | Report as abusive
 

“But what’s missing here is the actual mechanism by which the Fed will change expectations about the state of the economy.”

felex, read nick rowe at worthwhile canadian & andy harless at employment interest & money…

Posted by rjs0 | Report as abusive
 

Felix, I understand where you’re coming from, because the NGDP advocates tend to be frustratingly vague about policy levers. Sumner is the worst of the lot – he’ll start by saying “negative interest rates on reserves”, and when someone points out that the Fed lacks authority to do this, he’ll just say that it’s not an issue because the Fed has already done things that it has no clear authority to do. But it is an obvious logical fallacy to assume that all illegal actions are equivalent; in his calmer moments, I’m sure Sumner knows this. Sumner also gets muddled about whether his NGDP futures proposal is feedback to the Fed or a policy lever. Even Nick Rowe’s “People of the Concrete Steppes” post was amusingly lacking in concrete steps.

But as Noah Smith points out, it’s actually pretty simple: the Fed can make NGDP has high as it likes by printing money and buying stuff. The issue, then, is not the lack of a concrete policy lever but the lack of political support for applying it.

Note that you personally are part of the problem, not the solution. Remember how you gushed over that idiotic “Bernank” Fed video?

Posted by Greycap | Report as abusive
 

i’m surprised to read this weak argument from the usually sharp Mr. Salmon.

Are you denying that the Fed is unable to generate the inflation level it wants? Imagine if the Fed announces tomorrow that it will buy ALL of Manhattan. Remember, it can print all the money it wants, so it can do it. Now, imagine that everybody believes the Fed will actually do this. What do you think would happen to real estate prices? I would say that before it has even bought one building, the prices would jump immediately.

That’s what people mean when the say the Fed can achieve a lot just by communicating its intentions clearly. Because it has this magical infinite money printing machine, it has basically absolute power over inflation.

Now, why create inflation? Because (1) it reduces people’s debts in real term; (2) it nudges investors out of cash or low-yield positions, and into riskier stuff like business ventures (jobs); and (3) it encourages people to spend now rather than later, when their cash will be worth less.

Posted by adabsurdo | Report as abusive
 

Re: Fed buying stuff

If inflation expectations increase, wouldn’t that juice the yield on treasuries?

If that’s the case, I’m fine with moving my cash to a CD, assuming the increase in interest gets partially passed on to me from the bank.

Home prices may increase, but does that add participants to the real estate markets? Perhaps speculators, but again, you’ll have to pay a higher rate to get a loan.

The big advantage is number 1, but you could accomplish this via loan forgiveness / mods (not that I agree with that), without the nasty side effects of inflationary policy like this.

Posted by djiddish98 | Report as abusive
 

Funny that you should bring up FDR. If you had been paying attention to Sumner/Beckworth/Yglesias/Avent/et al for the past 2 years rather than jumping into the fray only when NDGP targeting is gaining some popular attention, you’d know that there’s consensus among economic historians that what fueled the robust recovery in 1933-36 wasn’t FDR’s fiscal policies but rather his commitment to a price level target (i.e. returning prices to pre-depression levels). I’ll link to Yglesias since I assume you’d immediately discount anything by Sumner or Beckworth.
http://thinkprogress.org/yglesias/2011/1 0/30/356683/christina-romer-joins-team-n gdp-level-targeting/

Posted by agc2 | Report as abusive
 

Funny that you should bring up FDR. If you had been paying attention to Sumner/Beckworth/Yglesias/Avent/et al for the past 2 years rather than jumping into the fray only when NDGP targeting is gaining some popular attention, you’d know that there’s consensus among economic historians that what fueled the robust recovery in 1933-36 wasn’t FDR’s fiscal policies but rather his commitment to a price level target (i.e. returning prices to pre-depression levels). I’ll link to Yglesias since I assume you’d immediately discount anything by Sumner or Beckworth.
http://thinkprogress.org/yglesias/2011/1 0/30/356683/christina-romer-joins-team-n gdp-level-targeting/

Posted by agc2 | Report as abusive
 

What about no policy at all! When will people realize that monetary policy is just a sophisticated word for legal counterfeiting! What do we do with counterfeiters? We put them in jail. why you ask? because, they get real goods and services with something that masquerades as something obtained by providing a real good or service. Central banking is the same. The entire logic of 2% inflation target is total nonsense. if apples and oranges are trading at $1, and the desire for oranges relative to apples goes up, inflation (the average price) could go up, down, sideways. It all depends on elasticity of demand and supply. So why would you have a target of 2% on millions of prices that are moving up or down to reflect society’s demands. Such nonsense!

Posted by nutstoo | Report as abusive
 

I thought Joe Weisenthal’s piece was pretty dumb, and I’m a bit more sanguine about the prospects for NGDP targeting than you, but the point that it’s not a magic bullet is one I’ve been making in my little corners of the world as well. I think it would very nearly solve one class of economic problems, leaving others to be dealt with.

Posted by dWj | Report as abusive
 

FYI, the market monetarists smashed the WSJ editorial page pretty hard when they first tried to tackle nominal GDP targeting until that lady actually read more about it and posted a more honest appraisal.

Posted by jmh530 | Report as abusive
 

I don’t understand. The post seems at points to say that the Fed would seek to target NGDP growth by managing expectations, and then objects that Fed has no credibility.

But isn’t the idea that the Fed simply sets NGDP to whatever it wants. This is the method by which the Fed manages expectations, not the result of managing expectations.

And if you know that NGDP growth will be at least, say 7%, then one expects (by defintion of NDGP) that either growth or inflation will go up. At first you might think only inflation will go up. But then a moment of thought reveals that higher inflation will cause higher growth. So then you expect growth to increase.

Or does Salmon think that a group of people with the power to buy anything at any price they want cannot cause inflation? That would be a weird thing to believe, but it would at least explain the blog post.

Posted by C-Ealy | Report as abusive
 

“Imagine if the Fed announces tomorrow that it will buy ALL of Manhattan. Remember, it can print all the money it wants, so it can do it.”

If *you* owned Manhattan, would *you* sell it on these terms?

Immediately following the announcement, assuming it was deemed credible, the dollar would be finished as a currency. Nobody would accept it as payment for any new transactions. You would have sold Manhattan for a handful of glass beads.

The real question is how far the Fed can go in expanding the money supply WITHOUT destroying the currency. As long as people continue to value and trade in dollars, then the Fed can buy whatever it wants.

But it is a mistake to assume that can continue indefinitely.

Posted by TFF | Report as abusive
 

Glad to see MMT and Sectoral Balances getting mainstream play.

Posted by petertemplar | Report as abusive
 

TFF – my manhattan example was just a thought experiment to illustrate the fact that the Fed has absolute power to create inflation at any level it wants to. prices of whatever assets the fed starts to buy will bid up until it stops buying them. and indeed, just by stating its intentions, prices will go up because people will anticipate the fed’s moves.

Posted by adabsurdo | Report as abusive
 

Agreed, adabsurdo, but the caution still holds (albeit weakened). The Fed has absolute power to devalue the currency, but at some point people become reluctant to accept it in trade.

Is it possible that the monetary increase necessary to achieve 5% NGDP growth would lead to a decline in real GDP? If so, such a policy would be self-defeating.

Reason I ask is that we’ve seen a massive increase in the Fed’s book while NGDP has been very sluggish. Makes me wonder how much more would be required to achieve the target.

Posted by TFF | Report as abusive
 

TFF – nobody is arguing for Zimbabwe-style runaway inflation. To get back on the NGDP target path, it would require 4-5% inflation, instead of 1.5-2% like now. this is actually pretty much in line with historical standards – inflation was around 5% in the 80s.

also, keep in mind that the one of the key parts of NGDP targeting involves the Fed clearly stating its intentions, to leverage the markets into doing most of the work. But the Fed has absolute power over inflation, so if people actually believe what it says, they will act accordingly and make it a self-fulfilling prophecy, at much lower cost to the Fed.

Posted by adabsurdo | Report as abusive
 

Works for me… I’d love to see 5% to 7% inflation for a few years, as I think that would go a long way towards getting the economy back on track.

Posted by TFF | Report as abusive
 

Thinking that the Fed can control the economy under any conditions is accepting the fallacy that supply side economics is more than wishful thinking. The Fed can inject all the money it wants into the economy, but if people don’t want to use it, it won’t matter. Setting a target for NGDP doesn’t mean you will get there, we need to create a mechanism for achieving goals beyond just printing money.

I’m not saying printing money is bad, but it needs to be spent – invested preferred over consumed, but either will be better than nothing in the short term. Making more capital available alone accomplishes nothing towards the goal of creating long term jobs, as employers still need to be confident the investment is worthwhile.

Tweaking interest rates and money supplies can yield results in a more stable environment, but when confidence is low, and consumers are reluctant or unable to spend, those minor adjustments will yield even less minor change. The economy grew at an artificially high rate in the last decade because it was pumped full of debt, and people were willing to borrow to consume. They are not as willing now, so growth needs to be driven by investment, and not consumption. The Fed can not force investment to happen, but Congress and the president can, if they work together.

We’re not going to see inflation (other than caused by fluctuations in worldwide energy supply/demand) until demand is greater than supply, and that won’t happen until more consumers are working and confident of stable employment. The Fed can not convince consumers to change their attitudes, and the government is failing at that. cutting taxes will not increase consumer spending; cutting government spending will not increase consumer spending; and neither will increase private investment that will create growth.

Posted by KenG_CA | Report as abusive
 

Ken_G, I think I read that the household savings rate is back to its pre-recession levels… Consumers are “doing their part”.

The shortfall of demand, if any, is on the corporate side.

Posted by TFF | Report as abusive
 

What a dumb comment about “Obama being no FDR.”

Look, I know politics isn’t your beat, but surely you’ve noticed that the White House has been pushing for fiscal stimulus for a while now (much like FDR did in his day). It passed a huge stimulus bill in ’09, its tax cut compromise contained still more stimulus, it continually tries to negotiate bargains with Republicans that trade short-term stimulus for long-term deficit cuts, and in the last few months it’s started another push for a second large-scale stimulus bill. The relevant difference here is not between Obama and FDR, who both wanted to pursue aggressive fiscal solutions, but between the 72nd Congress, which also wanted to pursue aggressive fiscal solutions, and the 112th Congress, which wants nothing to do with the question.

If you’re going to accuse other bloggers of having unrealistic expectations of the wrong set of economic policymakers, you really ought to be more careful that you yourself aren’t doing the exact same thing in the political sphere.

Posted by WHS | Report as abusive
 

The way Keynesian fiscal policy produces NGDP growth is inflation. The way monetary policy produces NGDP growth is inflation. A fiscal policy without monetary support (as in Japan) just creates debt (the inflation from monetary policy often makes buyers less leery of buying debt as well, so not a completely free lunch). The difference is that one relies on Congress, a very flawed mechanism. Central banks, as in Switzerland recently, can just publicly make a statement and things fall into place. It doesn’t have to deal with filibusters every time it makes a decision. If it ends up overreacting it can dial things back down pretty easily.

Posted by TGGP | Report as abusive
 

TFF, but there are less of them with money to spend. And while they may have lowered their savings rate, I don’t think they’re borrowing as much – my guess is the decreased home prices means less home equity loans to finance consumption.

But you’re absolutely right – a huge shortfall of demand on the corporate side. Cash is just sitting there, not even earning interest, and with the corporations idling all that cash, the value of their business in the US is declining.

Posted by KenG_CA | Report as abusive
 

Ken_G, I’m hardly an expert on economic measures, but I believe household savings rate is calculated net borrowing. Essentially “Income less spending”, converted to a percentage?

And while household income may have dropped a bit (less capital gains contribution than in 2007), I don’t think it has fallen off THAT much.

But corporations are taking a larger piece of the pie than ever before, and are not presently reinvesting those profits. Thus money leaks out of the active economy like a sieve.

Posted by TFF | Report as abusive
 

TFF, are you talking net absolute dollars being saved, or percentage of income minus debt being saved? If it’s a percentage, then it doesn’t take into account how much people have available to spend. If it’s absolute, then it ignores the distribution of income and spending.

Unemployment is higher than it was in 2007, so right away, there are more people who don’t have money to spend. And among those who have remained employed, I think their income has been static, so they will not spend as much. The economy may be as large as it was 4 years ago, but it’s spread over less people.

I would be happy if money were leaking out of the economy like a sieve. I think it’s more like osmosis, except once it gets to the other side it stays there.

Posted by KenG_CA | Report as abusive
 

“If it’s absolute, then it ignores the distribution of income and spending.”

Yes, I believe it ignores the distribution. Still, from a demand perspective it doesn’t much matter how the spending is distributed. The money is being earned (even if it is a bit more concentrated) and it is being spent (even if on fewer people).

“I think it’s more like osmosis, except once it gets to the other side it stays there.”

Sufficient pressure applied to the fluid can reverse osmosis… That may be a more optimistic analogy than a sieve.

Posted by TFF | Report as abusive
 

Try the following link, Ken_G?
http://www.bea.gov/national/nipaweb/Nipa -Frb.asp?Freq=Qtr

Spending has picked up recently, reaching new highs. The savings rate is still a bit higher than it was in 2005 (the epicenter of the borrow-and-spend era), but not dramatically so.

This is admittedly a fairly recent change, with annualized personal spending up $500B YOY and the dip in the savings rate most notable in 3Q11.

Still, I think you are overplaying the lack of consumer demand in the equation.

Posted by TFF | Report as abusive
 

I concede that consumer demand has increased, but not faster than supply, which is why we don’t have much inflation.

Posted by KenG_CA | Report as abusive
 

Because of continuing productivity increases, consumer demand CANNOT increase faster than supply. The population isn’t growing fast enough (besides, that increases supply alongside demand) and the benefit from the increased productivity is flowing to the corporations.

Unfortunately that brings us back to the most intractable of our problems — the negative demographics of an aging population. Aren’t going to find a policy solution to that one.

And yes, those dynamics make it difficult to generate inflation.

Posted by TFF | Report as abusive
 

It’s funny how attacks on NGDP usually come in two complete polar opposites:

1. The Fed is not credible! They could make all sorts of announcements and buy stuff until those announcements come to fruition, and it wouldn’t matter because only fiscal policy really matters.

2. The Fed will debase the currency by printing money! There will be massive inflation!

It’s particularly frustrating when these arguments are made BY THE SAME PEOPLE. These people complete misunderstand how inflation happens. It doesn’t happen just because a lot more money is printed. It happens when more money is chasing after less goods. And by chasing after less goods, I mean spending money on less goods. In other words, NGDP.

It may be true that, to various extents, inflation anywhere and everywhere is a monetary problem. But it’s a monetary problem only to the extent money is spent. Sumner et. al. are just talking about targeting spending levels vs. average price levels, but either one would be far superior to today’s Fed policy.

Posted by mwwaters | Report as abusive
 

TFF,

It doesn’t really matter whether spending reached “new highs.” Spending, i.e. NGDP, reached new highs in 2007. Before that, it reached new highs in 2006. And in 2005. And in 2004. And so on. NGDP doesn’t need to just be at its highest level ever. If it’s not, then that risks deflation. NGDP needs to be growing to sustain full employment.

Think of it this way: what if a company had revenues that were completely flat, or went up 0.01%. If the company wanted to keep the same number of employees, it would have two options:

1. Put a salary freeze on all employees, even for employees who deserve a raise.

2. Give raises for the employees who deserve a raise and lower wages for employees who don’t.

Only giving raises to good employees would lower the company’s margins and it may lose money, so that’s not an option.

In the real world, companies do not lower wages. Instead they lay off a few people and then they have room to give some employees raises. Extrapolate that company’s revenues to the country’s revenues as a whole, then you can see how flat NGDP leads to less than full employment. In areas with less demand, like construction, wages just adjust too slowly to their new market levels.

People think of NGDP targeting as some exotic and economically technical thing, but the example above should make it easy for non-economists to relate NGDP to full employment. Talks of expectations and all that obscures the fact that NGDP is THE issue with regard to full employment and putting NGDP back to growth, through either monetary or fiscal policy, is the only way to return the economy to full employment.

Posted by mwwaters | Report as abusive
 

“It doesn’t really matter whether spending reached “new highs.””

@mwwaters, you missed the point — if the personal saving rate is down to 4.1%, there is very little potential for further gain in that department. I don’t think anybody has argued that the 1.4% savings rate from 2005 is either desirable or sustainable, and even THAT would add just a few hundred billion to the GDP.

“Think of it this way: what if a company had revenues that were completely flat, or went up 0.01%.”

Or we could imagine a more typical scenario in which a company has revenues that are up ~5% but shareholders who are expecting 8%-12% annual growth.

“In the real world, companies do not lower wages. Instead they lay off a few people and then they have room to give some employees raises.”

Or they lay off a few people, freeze wages for the rest, and generate higher profit margins. If you’ve read any quarterly reports recently, you surely realize that is what is happening right now. Operating margins are increasing faster than top-line growth and have been for a few years now.

There are four ways to increase NGDP:
(1) Increase corporate investment, cutting into that exceptionally healthy cash flow. Of course they have enough excess capacity that they don’t need to hire right now, especially not in the US.

(2) Increase corporate hiring, cutting into those operating margins. Same objection as to #1.

(3) Import less and export more. Requires either a trade war or greater cooperation from China.

(4) Generate sufficient inflation to paper over the real GDP, resulting in falling wages for all but the favored few.

My earlier comments were in response to Ken_G who was arguing an insufficiency of consumer demand. Unfortunately that has grown as far as it can without rising wages.

Posted by TFF | Report as abusive
 

This is just silly:
“Well, OK, it’s hard to oppose managing expectations so that everybody believes that we’re going to have strong growth going forwards. But the Fed already has a full-employment mandate, and it’s clearly failed at that. Simply announcing that you’re working towards some stated end can be a good idea — but only if you can credibly meet that end.”

The reason the full-employment mandate doesn’t effectively manage expectations is that it has virtually no value for predicting Fed policy!

The Fed righty thinks it lacks credibility to hit an employment target and plumps for an implicit inflation target instead, effectively ignoring half its mandate. But the Fed does have the tools to hit an NGDP target. One of the biggest advantages of an NGDP target is that hitting it doesn’t require neglecting either half of the dual mandate.

Furthermore, I fear that in your remarks on QE you’re making the mistake of thinking NGDP targeting fails if it doesn’t boost real GDP. It doesn’t. As Steve Randy Waldman has argued (http://www.interfluidity.com/v2/2347.ht ml), it’s a good thing that NGDP targeting ensures recessions will be inflationary.

Posted by ginsbu | Report as abusive
 

I very much agree with this post. So much so that I have decided to stop writing on the topic because I tend to froth at the keyboard and get rude.

I do have two comments. First, I think the Fed still has some ammunition which does not require confidence fairy powder in the cartridge to be fired. I think that the Fed can drive up the price of RMBS buy buying more (on top of those it bought for $1 trillion (note I was careful not to assert that said bonds are worth $1 trillion)). I think this could have an effect on the housing market. I think it’s well worth a try (who cares what I think). So do Joe Gagnon and Paul Krugman (ohhhh that’s different).

The other is on Obama, FDR and fiscal stimulus. They are, as you note, quite different. The reason is that Obama believes in the Keynesian argument for fiscal stimulus and FDR didn’t. He spent money because he saw great need, but he always aimed for budget balance. He cut back spending and raised taxes in 1937 causing the great recession (which is greater than the current so called great recession).

The important difference between now and the FDR administration is that Congress has a completely different composition. FDR had huge gigantic majorities for 6 years. Republicans back then didn’t filibuster everything. Obama had an effective majority for a few months. And that includes Ben Nelson and Joe Lieberman.
Oddly, the only economic policymakers you mention at all are Bernanke and Obama. You don’t mention Congress.

I think it was universally agreed in early 2009 that Obama was much more Keynesian than FDR had ever been.

Since then, Obama hasn’t had anything like the power FDR had from March 1933 (when he took office) until the coalition of Republicans and Southern Democrats won a majority in 1938.

Posted by robertwaldmann | Report as abusive
 

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