What are the odds that both gambles will work? Not very good, unfortunately. What will get in the way are two separate obstacles, but both involve the source of economists’ recurrent argument: timing. Federal spending tends to cultivate its own dependencies and, politically, is a lot easier to increase than to decrease. Based on past experience, Congress will continue to spend lavishly long after it makes any sense at all.
On the Federal Reserve side, the information base on which monetary policy is built has never had the accuracy or consistency needed to time policy shifts precisely. But even if the data were more accurate and the Fed’s decisions perfectly timed, it could still find its actions diluted, or even thwarted, by overly energetic Congressional spending.” Read more.
“Current course leads to inflation”
HeraldNet, December 26, 2010.
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