Should The Fed Become a “Social Wealth Fund?”

By Karen Shaw Petrou

On November 30, the New York Times ran an op-ed arguing that the Fed could make a big economic-equality difference by becoming, in essence, a giant equity holder on behalf of the nation’s least wealthy.  This concept takes Milton Friedman’s idea of “helicopter money” one step farther, creating “helicopter equity” in hopes of improving long-term wealth accumulation instead of the consumption for which Mr. Friedman wanted his dollars dropped from the sky.  From a progressive-policy perspective, turning the Fed into a giant, redistributive mutual fund has considerable appeal.  Continue reading “Should The Fed Become a “Social Wealth Fund?””

Why Liberal Economics is to Growth and Systemic Risk as the Clinton Campaign was to Winning the White House

By Karen Shaw Petrou

At its October meeting, the IMF’s economists pronounced that global economic prospects are “benign,” with financial risks well within acceptable bounds, at least for now.  But, as Martin Wolf said the following Friday in the Financial Times, the meeting’s mood was anything but calm and confident.  Why?
Continue reading “Why Liberal Economics is to Growth and Systemic Risk as the Clinton Campaign was to Winning the White House”

Why “Full” Employment is an Empty Promise

By Karen Shaw Petrou

In her speech on September 26, FRB Gov. Brainard deploys a lot of data to raise, but then duck, what I think is the most critical question about post-crisis monetary policy:  Is U.S. employment really “full” enough to justify wider wealth inequality that is in part the Fed’s fault?  Chair Yellen and others defend quantitative easing (QE) and ultra-low rates on grounds that U.S. “full” employment will eventually be matched by growth, consumption, and resilient, robust recovery.
Continue reading “Why “Full” Employment is an Empty Promise”

What $4.5 Trillion Can Do – But Not for You

By Karen Shaw Petrou

Following the Federal Open Market Committee (FOMC) meeting of September 19-20, Chair Yellen admitted that she really didn’t understand if the Fed’s $4.5 trillion portfolio had any role in the slow-go U.S. recovery.  Many have since remarked on the startling fact that the Fed to this day is not sure if quantitative easing (QE) works and, if it does, how.  And, despite all this uncertainty, the Fed appears bent on keeping at least a few trillion in its hands just in case – presumably even if it didn’t work this time around, maybe it will the next time the U.S. economy needs a bit of a boost, or so the Fed seems to think.
Continue reading “What $4.5 Trillion Can Do – But Not for You”