Matthew Yglesias ponders why we are here:
Monetary Policy In A Storm: David Leonhardt channels the economics blogosphere in a great Sunday Review column on monetary policy:
But you would also find a sizable group of economists who thought the Fed could and should do far more than it was doing. This group, known as doves, tilts liberal, though it includes conservatives as well. If anything, it can probably claim a larger number of big-name economists — J. Bradford DeLong, Paul Krugman (an Op-Ed columnist for The New York Times), Christina D. Romer, Scott Sumner and Mark Thoma, among others — than the camp that believes the Fed has done too much.
You would never know this, however, from listening to the public debate among Federal Reserve officials. That debate is much narrower…
Tragically, the growing media awareness of this school of thought seems to have come far too late to save us from the disasters of the past 18 months and the bleak situation I expect to play out over the next 18. But I do believe that ideas have consequences. At a crucial moment in the winter of 2008-2009 and then for most of the subsequent year there just weren’t enough people outside specialist communities who grasped the importance of these issues. Everyone—whether or not they’re constitutional lawyers by trade—understands that the Supreme Court exists, that its actions are important, that authority to nominate people to fill vacancies on its bench is one of the President’s most important powers, that lots of things hinge on filling those seats with the right people, etc. The Federal Reserve simply wasn’t on the radar, President Obama meekly reappointed a conservative Republican to the most important economic policy job in the country, vacancies sat unfilled, hard money cranks dominated the public debate, and poor macro performance started to drag down progressive policy across the board. We have to do better.