Quote:
Originally Posted by Archaea
Yes, but he did not agree with Keynesian policy on fiscal issues. And perhaps I am mistaken, but I do not believe he accepted the "multiplier" fantasy.
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The problem with Keynesian fiscal policy is that you're supposed to increase spending and cut taxes during recessions, and do the reverse during times of plenty. Politicians don't have the willpower to do the latter, resulting in huge deficits.
Unlike politicians, the Fed has the resolve to raise rates when they're supposed to and cut them when they're supposed to.
However, during the Great Recession we already maxed out on monetary policy. Interest rates were at 0%. We had quantitative easing what, three times?