By Stephanie Kelton, Associate Professor of Economics at the University of Missouri-Kansas City. Cross posted from New Economic Perspectives .
I’ve grown increasingly frustrated by the near universal cry for more action from the Fed. My friend and fellow blogger Marshall Auerback has quipped that it’s as if every mainstream progressive received the same White House memo. I imagine it looked something like this:
To: Mainstream Media (TV, Radio, Print Media)
From: Office of the White House
Date: June 10, 2012
Re: Messaging on the Recovery
The economic recovery is faltering. The fiscal cliff is nearing. Many nations have already fallen back into recession. The net worth of a typical American family is down almost 40 percent since the start of the crisis. Unemployment is rising. People are worried about keeping their jobs, holding onto their homes and paying down the enormous debts they accumulated over the last decade or more. The bloodletting at the state and local government level continues unabated, and this is compounding our economic problems. Consumer confidence is down, and small businesses are struggling to remain profitable.
Some of you have written about the mistakes of our past, pointing out the trauma that was inflicted in 1937, when FDR decided it was time to move toward a balanced budget. Please stop that. This is an election year, and I cannot afford to be viewed as soft on the deficit. Besides, Congress will not support anything I put forward, so we’ve got to enlist the help of an independent body like the Federal Reserve if we’re going to improve things before November.