For more than 25 years, Project Syndicate has been guided by a simple credo: All people deserve access to a broad range of views by the world's foremost leaders and thinkers on the issues, events, and forces shaping their lives. At a time of unprecedented uncertainty, that mission is more important than ever – and we remain committed to fulfilling it.
But there is no doubt that we, like so many other media organizations nowadays, are under growing strain. If you are in a position to support us, please subscribe now.
As a subscriber, you will enjoy unlimited access to our On Point suite of long reads and book reviews, Say More contributor interviews, The Year Ahead magazine, the full PS archive, and much more. You will also directly support our mission of delivering the highest-quality commentary on the world's most pressing issues to as wide an audience as possible.
By helping us to build a truly open world of ideas, every PS subscriber makes a real difference. Thank you.
CHICAGO – Poor Ben Bernanke! As Chairman of the United States Federal Reserve Board, he has gone further than any other central banker in recent times in attempting to stimulate the economy through monetary policy. He has cut short-term interest rates to the bone. He has adopted innovative new methods of monetary easing. Again and again, he has repeated that, so long as inflationary pressure remains contained, his main concern is the high level of US unemployment. Yet progressive economists chastise him for not doing enough.
What more could they possibly want? Raise the inflation target, they say, and all will be well. Of course, this would be a radical departure for the Fed, which has worked hard to convince the public that it will keep inflation around 2%. That credibility has allowed the Fed to be aggressive: it is difficult to imagine that it could have expanded its balance sheet to the extent that it has if the public thought that it could not be trusted on inflation. So why do these economists want the Fed to sacrifice its hard-won gains?
The answer lies in their view of the root cause of continued high unemployment: excessively high real interest rates. Their logic is simple. Before the financial crisis erupted in 2008, consumers buoyed US demand by borrowing heavily against their rising house prices. Now these heavily indebted households cannot borrow and spend any more.
We hope you're enjoying Project Syndicate.
To continue reading, subscribe now.
Subscribe
orRegister for FREE to access two premium articles per month.
Register
Already have an account? Log in