More Stimulus, Please

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Matt Yglesias thinks the Fed needs to do more to stimulate the economy:

I’ve had some correspondents suggest that the Fed really does want to be more accommodating but there’s nothing more they can do. That’s certainly not the way recent statements have sounded to me. On the contrary, it seems to me that Ben Bernanke and co. are just flagrantly ignoring their actual legal mandate to balance considerations of employment, growth, and price stability. If we had five percent unemployment and five percent inflation instead of 10 percent unemployment and no inflation, the Fed would be freaking out. So why not freak out at 10 percent unemployment.

Actually, I’d like an answer to that question.  What should the Fed do at this point?  When inflation is high, the answer is obvious: if it wants to, the Fed can simply keep raising interest rates until inflation is under control.  The sky’s the limit.  But the other direction is harder.  With interest rates already at zero and trillions of dollars of quantitative easing already in place, what’s left to bring down unemployment?  Brad DeLong suggests that the Fed announce a long-term inflation target of 3% instead of 2%, but I haven’t heard a lot of other proposals.

If the answer is even more dramatic quantitative easing, that’s fine.  But is it?  Inquiring non-economists want to know.

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We didn't know what to expect when we told you we needed to raise $400,000 before our fiscal year closed on June 30, and we're thrilled to report that our incredible community of readers contributed some $415,000 to help us keep charging as hard as we can during this crazy year.

You just sent an incredible message: that quality journalism doesn't have to answer to advertisers, billionaires, or hedge funds; that newsrooms can eke out an existence thanks primarily to the generosity of its readers. That's so powerful. Especially during what's been called a "media extinction event" when those looking to make a profit from the news pull back, the Mother Jones community steps in.

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