In an interview with Bloomberg TV, economist Joseph Stiglitz stated that the Fed obviously mismanaged the economy before 2008 and that the outlook for America to return to full employment in the next few years looks very bleak.
Every downturn comes to an end but prospects of the US returning to full employment in the next five years is quite honestly bleak. Even the CBO does not really see the US getting to full employment until the end of the decade. And a lot of people, realists, think it’s going to be in the next decade. The fed can cause a problem. The fed obviously mismanaged the economy before 2008.
Stiglitz also commented on how growth could be affected in the upcoming election, using the austerity issues that arose in the U.K. as an example of growth stagnation beginning in the United States.
Obama has been advocating more stimulus and Romney has been advocating more contraction. UK has given us another example of what happens when you have austerity prematurely, economy goes down.. Depending on the outcome of the elections, it’s even conceivable that the slow growth will turn into close to zero growth, stagnation.
In closing, Stiglitz explains that the Fed can currently do nothing almost nothing, and he says “the real concern is that the hopes that the Fed might be able to do something are taking attention away from fiscal policy, which is going to have to be the focus of attention.”