Economist John Taylor spoke to WSJ.com’s Kelly Evans about the Fed, the U.S. economy, and government actions to combat the crisis.
Taylor is against the government’s stimulus decisions, and the Fed’s choice to use quantitative easing. He believes these steps were unusual, and that we needed to approach the crisis with more modest policy decisions.
- 0:40 The economy has been weak since the start of the recovery. The policies are the reason why. The stimulus package didn’t do much good, more uncertainty from regulation, government debt has raised uncertainty, QE has worried many about the Fed’s balance sheet and inflation.
- 1:40 Would not have done the large scale asset purchases. It didn’t have impact on mortgages.
- 4:30 The Fed can draw down excess reserves, without having it impact money supply much.
- 5:15 Inflation is a larger concern in the near term than deflation. Easy monetary policy could fuel this, even though it’s not working on the recovery. We can’t rule out inflation even though unemployment is high.
- 13:15 It’s wishful thinking to do fiscal reform in the future. We need to get started in 2012. It will mean negative growth. We need that plan, so people know what to expect.
- 15:50 We don’t have to get into a growth situation like Japan.
- 16:50 There is definitely a drag on the economy from the housing bubble going bust. Said “Sure” as to the U.S. being in a balance sheet recession.
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