Stephen Kirchner quotes from Treasurer Wayne Swan’s briefing notes from August 8, 2008: There are three broad considerations the Government would need to keep in mind in taking a decision to engage in discretionary [fiscal] action: – The Reserve Bank through its control over interest rates, determines the overall level of aggregate demand in the economy, […]

Tim Duy was recently interviewed by Bloomberg: The Fed ramped up its quantitative-easing program late in 2012, helping to keep the recovery on track last year in the face of higher taxes and reduced government spending. With that drag set to fade this year, the central bank started to scale back its stimulus in December. Offsetting Austerity […]

Here’s John Aziz replying to a Ramesh Ponnuru piece discussing monetary offset: But Fed policy wasn’t exactly tight during the stimulus. First, by the time the stimulus was enacted, the Fed had already dropped interest rates to zero, and it kept them there. Second, the Fed engaged in quantitative easing throughout the stimulus. By March 2009, […]

Mark Sadowski has some nice comments that provide data backing up a comment in my previous post.  When I was young the Fed liked to blame inflation on the fiscal authorities.  Suppose you asked the Fed the following question in early 1968: LBJ plans to raise income taxes to slow inflation.  If he does this […]

Mike Konczal has a new post with two arguments against monetary offset.  In both cases he suggests that the predictions of “market monetarists” have not panned out.  But in only the first case is the prediction even being made by a market monetarist. 1.  In the first case he discusses the fact that a while […]