Two worlds (fail to) collide

Thank goodness we have economics blogs to explain Ben Bernanke to us.

On Wednesday, I read at Scott Sumner's blog that:
...there are lots of simple answers (massive QE...etc.) But...for some reason our monetary authorities don’t see it this way. They view all these ideas as exceedingly risky....
Scott is outraged that the Fed refuses to do more monetary stimulus to reduce unemployment because they are worried about inflation.

But it seems that other people live in a different world. On Thursday, I read at FT Alphaville that:
The current wisdom appears to be that more quantitative easing (QE) would be a good thing...Bernanke only has one playbook, which he has so far followed almost religiously. The final solution in that playbook involves helicopters and money. So, no, he will not stop printing - it's the only idea he possesses.
Alphaville is concerned that the Fed is increasing monetary stimulus to reduce unemployment, and thinks they should worry about inflation.

Now clearly Alphaville and Sumner differ on their opinion about which route is better. Sumner thinks we need lots of QE (and related policies), while Alphaville suggests that we shouldn't have any more. A difference of opinion on policy is par for the course.

But more puzzlingly, they disagree over what Ben Bernanke is actually doing, or at least what he's about to do. The Fed can't simultaneously fit Sumner's description and also Alphaville's.

So is massive QE imminent or not? Maybe we'll find out later today when he makes his keynote speech at the Fed's annual conference.

My opinion? I'm with Scott: launch the QE2.


PunditusMaximus said…
This isn't difficult to resolve; conservatives are always lying. So Bernanke is not engaging in Qualitative Easing.

Like the idea that all antigay activists are actually closet homosexuals, I used to think that the idea that every statement made by a conservative in the economic realm is false was an exaggeration. It isn't. If a conservative is talking about the economy, he or she is not saying things that are true, due to either psychosis or intent to deceive.
WillORNG said…
What's needed is that the money is used effectively to support aggregate demand.

This can be done by employing anyone at minimum wage until un/deremployment equals available job vacancies, around 2% with no underemployment.

Check out and thoroughly read around the following;

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