Moneybox: Time for QE3

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Moneybox Time for QE3 Forget the happy jobs report—the Federal Reserve needs to boost the economy again. By Matthew Yglesias Posted Monday, Feb 06, 2012, at 09:58 PM ET Three and a half years into the Great Depression, just-inaugurated President Franklin D. Roosevelt urged Americans to believe that "the only thing we have to fear is fear itself." Three and a half years into the worst recession since then, America is more threatened by complacency than fear. One reason for complacency is the batch of recent good news. In late January, the Bureau of Labor Statistics announced that the economy added 200,000 jobs in December on a seasonally adjusted basis. Then last week came the news that January job growth, which the vast majority of analysts had expected to be weaker than December, was actually stronger—about 250,000 jobs were added. What's more, the latest report revised the December numbers up slightly and the November jobs figures up more. Suddenly, it appears the economy has turned a corner. (This should have been no surprise to Slate readers, who read it here in December.) The problem is that policymakers may reach misguided conclusions from the good news. With millions of workers still unemployed, factories operating below capacity, and office and mall space vacant, the overall volume of spending in the United States is, by definition, too low. We have the capacity—the workers and the machines and the buildings—to produce more goods and services, but we don't have the spending to call those goods into being. In normal times, the solution to a lack of demand is monetary easing—lowering short-term interest rates. But short-term ... To continue reading, click here. Join the Fray: our reader discussion forum What did you think of this article? POST A MESSAGE | READ MESSAGES Also In Slate Spitzer: The Philosophical Case for Higher Capital Gains Taxes Komen VP Karen Handel Resigns in Wake of Planned Parenthood Dispute The Misery of Watching the Super Bowl in Canada: Lame Canadian Ads	Advertisement
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