Just waiting for President Obama to deliver the State of the Union address. I like this particular political ritual. There’s something old-worldly about it. But I’m annoyed at the same time because I know Obama will take credit for the growing economy. Then Republicans in their response will say, no, it’s not Obama’s policies, it’s the Republican Congress that kept spending sane and supported the recovery.
It’s nice to be bi-partisan sometimes in that I can rightly say both sides are full of crap. The economic crash had nothing to do with George W. Bush, and the recovery since has nothing to do with Barack Obama, or the Republican Congress. This is Ben Bernanke and Janet Yellen’s recovery. While the Federal Reserve let demand expectations fall extremely low (leading to the financial crisis), it has at least been able to put a floor under our expectations. It doesn’t seem like they’ll let deflation happen, so it won’t. Expectations are everything. Contrast this with the European Central Bank, which fiddled while Rome (and most of southern Europe) burned.
Did quantitative easing work? Yes, and we should have done more of it. But Republicans sank into reactionary, gold standard rhetoric while Democrats were too ignorant to realize that monetary policy was where economic success would lie. So Bernanke (and now Yellen) have fought against the major political headwinds and forced us to follow a somewhat easier monetary policy than what otherwise would have been. So Ben & Janet, thank you for the current state of our economy. Keep up the good work and don’t let your guard down.