That’s the question I tackle here at MSNBC’s blog. And I’ll be on the Ed Schultz show later to discuss with the great Ez Klein.
The piece elaborates on my view that while the new moves announced by the Fed–more forward guidance (we’ll keep rates really low for really long) and more bonds buys (QE3)–will help a little bit, we need more than a little bit of help. IE, we need fiscal policy to stimulate the missing demand that will in turn give more traction to the Fed’s low interest rate agenda.
Greg Ip goes into some useful details here, including this interesting graph…obviously, a lot going on in this picture, but I think it’s suggestive of the diagnosis above: the missing ingredient is more demand.
Source: Greg Ip, The Economist