SLOANBREW

Pessimism with an Australian accent. Justin Wolfers of the University of Pennsylvania’s Wharton School of Business on the recession.  I think this is the gem of the interview:

“We’re in a very odd situation, which is normally we have idiots in Congress, both houses. And that’s just a norm of political economic life… But normally it doesn’t matter because they can do idiotic things on macro policy and the Fed just undoes it. And the people who are really setting macro policy at the Fed, the problem is the Fed’s at the zero lower bound. Which means the idiots are now making macro policy, and it’s worse than that. Which is Congress has a very different incentive with respect to stimulating the economy than my unemployed father-in-law and than the president. And then, so, you know, there’s a strong bias towards inaction… I can’t see inside the minds or hearts of these people. But to believe that austerity is the order of the day when we have millions of people, long-term unemployed strikes me as problematic.”