Bruce Bartlett - Its Aggregate Demand!

Bruce Bartlett has a post in the New York Times Economix blog about how the root of the current crisis is Aggregate Demand (The only news in this is that Bartlett use to work for Ron Paul, Jack Kemp and George Bush). Basically, he is calling for the Fed to increase the money supply - that inflation is the lesser of evils right now. However, the post does have some good number on money supply, velocity, and the relationship between asset prices and demand (wealth effect). Could be good to use with students.

Assessing Quantitative Easing

The Wall Street Journal has a good graphic assessing Quantitative Easing - basically it shows that QE did not accomplish very much in terms of stimulating the economy. I think this is a bit misleading since I do not think that was really the goal of the QE program. Basically, it was to prevent deflation and move investors away from safe haven of government bonds (by lessening the benefits of holding bonds). The argument that a liquidity trap makes monetary policy all but ineffective seems to hold up. So, while QE may not have gotten us out of the hole we are in, it did prevent deflation which would have made things worse - and that is the real measure of its success.




Here is the graph: