Sunday, August 28, 2011

"The Mind of the Fed"

David Leonhardt of the The New York Times dissects the limits of debate within the Federal Reserve Bank. (Hint: It has to do with the power of the banks in choosing board members - who could have guessed?):
IF you were to conduct a survey of the country’s top economists, you would find a fair number who did not believe that the Federal Reserve should be taking more aggressive steps to help the economy. Some would worry that injecting more money into the economy might unnerve global investors or set off uncontrollable inflation. Others would wonder whether, with interest rates already so low, the Fed even had much power to lift economic growth.
But you would also find a sizable group of economists who thought the Fed could and should do far more than it was doing. This group, known as doves, tilts liberal, though it includes conservatives as well. If anything, it can probably claim a larger number of big-name economists — J. Bradford DeLong, Paul Krugman (an Op-Ed columnist for The New York Times), Christina D. Romer, Scott Sumner and Mark Thoma, among others — than the camp that believes the Fed has done too much.
You would never know this, however, from listening to the public debate among Federal Reserve officials. That debate is much narrower.

Work Sharing as a stop-gap to extreme unemployment

Dean Baker at Bloggingheads offers an innovative idea to keep the workforce engaged during periods of persistent unemployment.