I've had and listened in on lots of economic policy conversations among lots of people in the past two months. It strikes me that everyone I've talked to or listened to has made one overriding assumption--an assumption that is almost never mentioned.
That assumption has three parts. They are:
- Macroeconomic stability would be much easier to preserve and major disasters like depressions and bad financial crises much easier to avoid if America's federal budget were rapidly moving toward surplus right now or in the near future.
- Nothing, however, can be expected from the rest of the government.
- Thus the Federal Reserve (and other central banks) will have to manage risks using monetary policy alone.
The fact that everybody--left or right, forward or back, up or down--takes it so much for granted that nothing helpful can be expected from the executive and legislative branches that it isn't even worth mentioning is profoundly depressing.