A speech HT Calculated Risk.
"With traditional monetary policy currently constrained from further reductions in the target policy rate, and with many analysts forecasting lower-than-desired inflation and a persistent, large output gap, agents may anticipate that the target federal funds rate will remain near zero for an extended period."
He is justifying this:
"But as a result, fiscal stimulus has potentially become more effective in boosting economic activity than it usually would be. "
What he is saying is that his borrowing customers cannot find solutions for the long term plans currently being presented by the Obama administration. If investors did have solutions for Obama and company, then they would be borrowing and investing in new firms like mad. Obama has specified too much, and it does not compute.
Fiscal expansion may be more effective? Obama and Congress need a more rational long term plan, try again. Either we expect too much from Congress, or Congress is contradictory and uncomputable.
The longer we wait for Congress to figure this out, the more rapid the rise in inflation as we restart.
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