Matt Yglesias has a great new post today showing that not only would the Fed be willing to sabotage Obama stimulus aimed at job creation, but some of the Obama appointees at the Fed would be willing to sabotage fiscal stimulus because of a perception that the job market is already doing fine:
If the Federal Reserve’s communications around what it’s doing with its quantitative easing programs have seemed unclear to you (and they sure have to me) then today’s John Hilsenrath story explains why—there’s no clarity because the FOMC is full of disagreement. Along with the usual chorus of QE-haters from a handful of regional banks, Hilsenrath reveals that Bush-era holdover Elizabeth Duke and Obama appointees Jeremy Stein and Jerome Powell are both deeply uncomfortable with the QE 3 strategy and have been consistently pushing for a quick exit.
At the same time, other members of the FOMC including Chairman Ben Bernanke seem to feel that the Fed ought to follow its legal mandate and engage in monetary easing at times of high unemployment and low inflation. I have to say that what considerations exactly lead Stein, Powell, and Duke to their view that the Fed ought to ignore its statutory mandate in favor of an ill-defined mission of bubble fighting have never quite been clear to me. One section of Hilsenrath’s report seemed especially distressing:
By April more officials, including the governors, were getting worried about terms like “QE-ternity” and “QE-infinity” floating around financial markets, which suggested some investors thought the program was boundless, according to people familiar with Fed discussions. The Fed officials thought the job market had made enough progress to warrant discussing an exit.
And people wondered how I could claim Summers would have been a hawk. Are Summers’ views any different from those of Stein?