09-16-2012, 04:40 PM
This has been an interesting discussion to follow, but I'm still not sure I understand your main point which is why the Fed in particular is the problem.
The current problems that the middle class has isn't really about consumer goods - well, except when people buy too much stuff that they don't need and rack up credit card debt. The problem is that housing, education, and health care have all increased way faster than inflation and incomes over the past decades. This has happened for a variety of reasons that don't really have to do with the Fed money policy.
The post you linked to is giving reasons is giving QE as a reason for a credit downgrade, but I'd say the real reasons behind our credit downgrades are increasing deficits and the lack of a political will to do anything about it. I believe the number one concern of the Fed is to keep currency stable, preventing either deflation or too much inflation. Within that constraint it acts to stimulate the economy. It's my impression that the recent actions are consistent with that.
What do you think the Fed should be doing instead, and what do you think the consequences would be?
The current problems that the middle class has isn't really about consumer goods - well, except when people buy too much stuff that they don't need and rack up credit card debt. The problem is that housing, education, and health care have all increased way faster than inflation and incomes over the past decades. This has happened for a variety of reasons that don't really have to do with the Fed money policy.
The post you linked to is giving reasons is giving QE as a reason for a credit downgrade, but I'd say the real reasons behind our credit downgrades are increasing deficits and the lack of a political will to do anything about it. I believe the number one concern of the Fed is to keep currency stable, preventing either deflation or too much inflation. Within that constraint it acts to stimulate the economy. It's my impression that the recent actions are consistent with that.
What do you think the Fed should be doing instead, and what do you think the consequences would be?