It might have been better if Powell had been Fed Chair from 2005 to 2009 and Bernanke Fed Chair from 2021 to 2024. So it goes.
It's amazing how we went from a housing surplus to a housing shortage in less than a decade. I guess a few million houses were Thanos snapped into nothingness.
I see why you say that, but remember that Powell was much more hawkish back then. You might also say it would have been better to have the Bernanke of today head the Fed in 2008, and the Powell of 2015 be in charge of the Fed in 2021.
Kevin Erdmann makes a persuasive case that the housing market in the early 2000s was nowhere near as overbuilt as we assume, and that the crash reflected a drop in demand caused by bad policy, which made it look like housing had been grossly overbuilt. He has two excellent books on the topic.
The Fed's non-steering thru the Lehman failure and the weeks after was frustrating. But I can't even think of how to analogize what they did in October - Increasing the rate for IOR from 0% (where it had been for 95 years to 1% (I think it was 1%. And only over the next two months did they decrease that to 0.25%). I recall one of the Fed members saying that with IOR of 0.25%, they were sure to not hit the ZLB. Amazing.
I also seem to recall that the Fed sterilized its lending to AIG and maybe Fannie and Freddie. So every dollar it lent to a troubled entity, it sold Treasuries. Since AIG et al had to just hold onto the money, this crushed velocity. I think it was George Selgin who pointed that out? But I can't recall for sure after all these years.
Yes, in September-December 2008 they were trying to bail out Wall Street without bailing out Main Street. (If you wanted to use lefty populist language.)
One of the weirder things in Bernanke's memoir is when he recollects how perfectly healthy financial firms were failing in early 2008 because markets in low risk corporate securities were panicked, and wrote that the Fed didn't use 13(3) loans to help them out because their failures were "unlikely to have a broad economic impact" even though right after that he notes that 13(3) loans were created during the Depression exclusively to make loans to economically unimportant firms.
Behold! Since the ancients did not understand gravity, but they did understand how things moved away from spinning centers, they naturally thought that if the Earth was spinning, it would look like they were being flung off into the aether.
I think most people find this attribution of causality counter-intuitive because they implicitly reason about causality using counterfactuals. In the bus example, if the driver has not been inattentive, there wouldn't have been an accident. So it makes sense to say that his inattention caused the accident.
But in the case of the Fed, if it had followed a different policy from the one it did follow, it is by no means clear that this policy would have been successful and that there wouldn't have been a recession. (There are too many alternative, unsuccessful policies for this to be true.) So it doesn't make sense to say that Fed policy caused the recession.
In general, I think this is why we don't accept that any agent who could have prevented something from happening also caused it. It attributes causality to too many places. For example, suppose you believe that the Fed could have prevented the recession, but given that it didn't, expansionary fiscal policy could also have prevented a recession. Well, if having the ability to prevent implies causal responsibility, then you will conclude that fiscal policy was also responsible for the recession.
"But in the case of the Fed, if it had followed a different policy from the one it did follow, it is by no means clear that this policy would have been successful and that there wouldn't have been a recession. (There are too many alternative, unsuccessful policies for this to be true.) So it doesn't make sense to say that Fed policy caused the recession."
Yes, that's the crux of the issue. Roughly 99% of economists disagree with my claim that the Fed could have easily prevented the Great Recession, and thus they don't believe it caused the recession. I do believe it could have easily prevented the Great Recession, and thus I think it caused it.
Similarly, I believe the Fed could have easily prevented most of the inflation overshoot in 2021-24 and the Great Inflation of 1966-81, and thus I believe it was primarily responsible for causing those inflationary episodes.
These latter two claims are considerably less controversial, especially for 1966-81.
For what it's worth, I don't think that is the crux of the issue. Even if it's true that the Fed could have prevented the 2008 recession (and I think it could have), it doesn't follow that if the Fed had adopted a different policy, it would have adopted the one that would have prevented the recession. It could, for example, have adopted a much worse policy that the one it did follow. So the counterfactual "different policy, no recession" is not straightforwardly true.
More generally, I think we are in agreement that the important issue is whether the Fed could have prevented the recession, and if so, how. Whether the Fed caused the recession in some metaphysical sense is not a very interesting question, unless you are the kind of person interested in having abstract discussions about the philosophy of causation.
Yes, the FED was at fault. However, I believe two deeper issues contributed to the havoc:
1.) An unacceptably narrow Overton Window of policy moves the FED considered prudent in preventing a downturn.
2.) A cultural norm that speculation must be punished.
The FED constrained itself, limiting its options for intervention, and was reluctant to be seen as rescuing those deemed 'immoral' market participants.
Just to be clear, immoral market participants would include banks, insurance companies, people that purchase homes with credit, and any other folks making a lot of $$$ as asset values go up.
I’m sort of agnostic about what triggered (caused) the September 2008 financial crisis. Maybe the Fed should have been shooting for a bit more inflation. Maybe it was a Black Swan upsetting a lot of overleveraged financial institutions. At any rate it was a big demand shock that the Fed failed miserably to react to in time. It should never have allowed the price level to fall and for inflation expectations to remain depressed for years. As soon as it saw that people might expect inflation to fall below target, (based on past actions and policy statements, no one SHOULD have expected a fall in price level) the Fed should have reiterated it would do what it takes to keep inflation on target.
Really great, love how clearly you express the ideas. There are connections between the macro ideas you discuss here and ideas about how organisms develop and behave, surprisingly. I'll explore those ideas in future essays.
As decidedly *not* an expert on macroeconomics, the far more likely explanation seem to me to be:
- "the Recession" was caused by the factors most economists traditionally name
- the "Great" portion (of "the Great Recession") *was* likely caused as you (Scott) suggest by tight monetary policy in 2008
I'm usually *not* a "split-the-difference" type, but in this case it seems wholly appropriate.
I'm genuinely somewhat surprised that neither you nor Tyler in his criticism/rebuttal of your take acknowledge that the above is more likely than either explanation alone.
It even seems to me you mostly mean what I suggest above, but for reasons I don't understand - perhaps your desire to emphasize the mistakes you believe occurred? - you don't seem much to mention even as a possibility.
If you've ever covered the above point in your writing, a link greatly appreciated.
You raise excellent, persuasive points, and I believe that looser monetary policy likely would have cushioned the recession, but I don't think that looser monetary policy would have addressed the critical underlying problem, which was not going away.
Yes, the failure of Lehman, in itself, would not create that much of a shock, but the panic which ensued was because the markets, politicians and the public suddenly became aware that the other banks faced the same underlying condition: too much leverage on financial products derived from real estate. Would looser monetary policy have facilitated the economy to outgrow that condition?
Thanks to the Basel II accords, the banks were allowed to leverage up the underlying mortgages, to unheard of levels. After the Fed called the banks downtown to pressure one to buy Lehman, then no bank would touch it after the covers were pulled back (and instead BofA bought Merrill), the markets correctly feared what that meant for the banking system.
Yes, it was terrible that the government initially bailed out Wall Street but as Warren Buffett pointed out: the patient was in cardiac arrest and demanded immediate care.
You are describing the conventional wisdom as to what APPEARED to happen in 2008. I agree that this is what appeared to happen. But it is not what actually happened. My point is that tight money caused NGDP to fall, which made the financial crisis much worse. People are confusing cause and effect---the financial crisis was actually mostly an effect of tight money.
I used your road/wheel analogy. A more nuanced analogy would be that the Fed spiked the punch with cocaine (zero percent money)* and then withdrew the entire punch bowl (raised rates rapidly). I feel this is true starting with at least the S & L crises. It was repeated in the 2008 housing crises (WaMu et. al). It showed up again with First Republic and Silicon Valley Bank.
*Personal note: back in 2007-2008 I got about 14 to 18 offers** to borrow money with zero percent interest and no fee charged. I had a mortgage that was about seven percent. Refinancing to a lower rate would have entailed large upfront charges. I accepted those offers and made minimum payments. I often updated a spreadsheet. Paying off old loans with new ones as new offers arrived - and they did. Literally all of my payments were applied to the principal. Eventually I got a HELOC with no upfront charges and a much lower APR.
** Banks I had never had business with -- Royal Bank of Scotland and too many others.
The main argument against your view, which I don’t see addressed, is that V is not constant and not independent of Fed policy, i.e. there is considerable uncertainty how its policies will impact the trajectory of NGDP. Doesn’t mean they should not try, but they are not omnipotent…
Further, the Fed simply does not have a reliable gauge of what NGDP is (the current jumps in the Atlanta Fed estimate are good example. Whereas there were signs of tightness in the summer of 2008, there also were signs of a booming (global) economy – a roofing oil price and a strong Euro that can also be interpreted as soft monetary policy (given USD’s role in global trade).
The analogy between the 1987 and 1929 is flawed, since I think there is a consensus that the first leg of the market crash in 1929 did not have a large economic impact. As you know, by March 1930, the market was only slightly down yoy.. It is the second leg of the crash and the global banking crisis 1931 that are usually seen as the “real deal”. Who knows how they 1987 crash would be judged had we had a global banking crisis in 1988 as a result of trade wars and other "real shocks"
I also think the moral hazard argument against bailing out financial markets every time they tank (1987, 1998-LTCM, etc.) is a valid one...
I completely agree on moral hazard. The Fed did not bail out the financial markets in 1987, they stabilized the macroeconomy. The Fed erred in 1998, as you say.
You misunderstood my point about 1929 and 1987. I don't believe the 1929 crash caused the Depression, and the 1987 crash is evidence for that claim. But the Depression began in the second half of 1929, and monetary policy failed to address it. I'm glad you agree on 1929, but most people are confused on the topic, which is why I mentioned it. (Robert Hall is a major economist, and he claimed the 1929 crash was a major financial crisis that led to the Depression.)
The second leg of the crash that you mention was itself caused by the Depression. If NGDP does not fall sharply in 1930, then there is no US banking crisis.
The first part of your comment does a nice job of explaining why the Fed should ignore oil prices and the $/euro exchange rate and focus like a laser on NGDP. Lags are an issue, which is why I favor market guidance and level targeting. Level targeting is the key, the reform that would have prevented the Great Recession. For a full explanation check out my book The Money Illusion.
A banking crisis is tight money in a round-about sort of way. Banks that were not already bankrupt tightened credit standards. Money available to borrow cant be borrowed. Assets that could have been sold to fund other purchases cant be sold.
Just because it wasn’t initiated by the Fed, doesn’t mean that money didn’t become scarce.
Sumner is spot on. N-gDp targeting can be corroborated by other metrics. Bernanke bankrupt America.
Maybe if you had a good teacher, like Dr. Leland J. Pritchard, you might understand money and central banking.
The academic community is delusional. All you have to do is dissect the data. Friedman gave us some good ideas. But those were incomplete.
The distributed lag effect of monetary flows, the volume and velocity of our means-of-payment money, are mathematical constants. As Dr. Richard G. Anderson put it, "reserves are driven by payments".
"The only relevant test of the validity of a hypothesis is comparison of prediction with experience." – Nobel Laureate Dr. Milton Friedman
What about fiscal stimulus? Fed stimulus inevitably distorts behavior, exacerbating speculation and concentrating wealth. In the short term, some Fed stimulus was necessary; but commitments to future government spending would have limited the amount of Fed stimulus needed, by bringing future spending into current decisions, while creating actual useful infrastructure.
Just the opposite. Keeping NGDP growth along a stable path of 4% or 5% reduces the amount of financial instability. Fiscal policy increases the national debt, which causes all sorts of future problems. (BTW, It also worsens the trade deficit, although I view that as a phony problem.)
Don't confuse appropriate monetary stimulus that maintains steady NGDP, with excessive monetary stimulus (like 2021-22) that causes an overheated economy. The latter is indeed bad.
If resources become unemployed and as the borrowing rate falls, many activities that do not pass an NPV test at full employment do pass in recession. An income maximizing fiscal policy will therefore spend more. This may be called "stimulus" and certainly "looks" Keynesian, but it's just good neoclassical economics.
It might have been better if Powell had been Fed Chair from 2005 to 2009 and Bernanke Fed Chair from 2021 to 2024. So it goes.
It's amazing how we went from a housing surplus to a housing shortage in less than a decade. I guess a few million houses were Thanos snapped into nothingness.
I see why you say that, but remember that Powell was much more hawkish back then. You might also say it would have been better to have the Bernanke of today head the Fed in 2008, and the Powell of 2015 be in charge of the Fed in 2021.
Kevin Erdmann makes a persuasive case that the housing market in the early 2000s was nowhere near as overbuilt as we assume, and that the crash reflected a drop in demand caused by bad policy, which made it look like housing had been grossly overbuilt. He has two excellent books on the topic.
Or have Stanley Fischer unretire. He always acted as if he targeted the NGDP trend level.
The Fed's non-steering thru the Lehman failure and the weeks after was frustrating. But I can't even think of how to analogize what they did in October - Increasing the rate for IOR from 0% (where it had been for 95 years to 1% (I think it was 1%. And only over the next two months did they decrease that to 0.25%). I recall one of the Fed members saying that with IOR of 0.25%, they were sure to not hit the ZLB. Amazing.
Even worse, they increased it to 1.5% in early October! Epic mistake.
BTW, in his memoir Bernanke admitted that the Fed erred after Lehman failed.
I also seem to recall that the Fed sterilized its lending to AIG and maybe Fannie and Freddie. So every dollar it lent to a troubled entity, it sold Treasuries. Since AIG et al had to just hold onto the money, this crushed velocity. I think it was George Selgin who pointed that out? But I can't recall for sure after all these years.
Yes, in September-December 2008 they were trying to bail out Wall Street without bailing out Main Street. (If you wanted to use lefty populist language.)
One of the weirder things in Bernanke's memoir is when he recollects how perfectly healthy financial firms were failing in early 2008 because markets in low risk corporate securities were panicked, and wrote that the Fed didn't use 13(3) loans to help them out because their failures were "unlikely to have a broad economic impact" even though right after that he notes that 13(3) loans were created during the Depression exclusively to make loans to economically unimportant firms.
I was just going to ask: " Have you read Kevin Erdmann?"
Much of my work builds on the perspective I gained from Scott, and he has been a vocal supporter of many of the novel conclusions I have reached.
Behold! Since the ancients did not understand gravity, but they did understand how things moved away from spinning centers, they naturally thought that if the Earth was spinning, it would look like they were being flung off into the aether.
I think most people find this attribution of causality counter-intuitive because they implicitly reason about causality using counterfactuals. In the bus example, if the driver has not been inattentive, there wouldn't have been an accident. So it makes sense to say that his inattention caused the accident.
But in the case of the Fed, if it had followed a different policy from the one it did follow, it is by no means clear that this policy would have been successful and that there wouldn't have been a recession. (There are too many alternative, unsuccessful policies for this to be true.) So it doesn't make sense to say that Fed policy caused the recession.
In general, I think this is why we don't accept that any agent who could have prevented something from happening also caused it. It attributes causality to too many places. For example, suppose you believe that the Fed could have prevented the recession, but given that it didn't, expansionary fiscal policy could also have prevented a recession. Well, if having the ability to prevent implies causal responsibility, then you will conclude that fiscal policy was also responsible for the recession.
You said:
"But in the case of the Fed, if it had followed a different policy from the one it did follow, it is by no means clear that this policy would have been successful and that there wouldn't have been a recession. (There are too many alternative, unsuccessful policies for this to be true.) So it doesn't make sense to say that Fed policy caused the recession."
Yes, that's the crux of the issue. Roughly 99% of economists disagree with my claim that the Fed could have easily prevented the Great Recession, and thus they don't believe it caused the recession. I do believe it could have easily prevented the Great Recession, and thus I think it caused it.
Similarly, I believe the Fed could have easily prevented most of the inflation overshoot in 2021-24 and the Great Inflation of 1966-81, and thus I believe it was primarily responsible for causing those inflationary episodes.
These latter two claims are considerably less controversial, especially for 1966-81.
It COULD have prevented over-target inflation the, but how much SHOULD it have prevented to maximally facilitate relative price adjustment?
And strong agreement that the Fed could and should have prevented the September financial crisis from resulting in a recession.
We still do not know why it did not.
For what it's worth, I don't think that is the crux of the issue. Even if it's true that the Fed could have prevented the 2008 recession (and I think it could have), it doesn't follow that if the Fed had adopted a different policy, it would have adopted the one that would have prevented the recession. It could, for example, have adopted a much worse policy that the one it did follow. So the counterfactual "different policy, no recession" is not straightforwardly true.
More generally, I think we are in agreement that the important issue is whether the Fed could have prevented the recession, and if so, how. Whether the Fed caused the recession in some metaphysical sense is not a very interesting question, unless you are the kind of person interested in having abstract discussions about the philosophy of causation.
I mostly agree except for your final sentence, which I'll address in an upcoming post.
Yes, the FED was at fault. However, I believe two deeper issues contributed to the havoc:
1.) An unacceptably narrow Overton Window of policy moves the FED considered prudent in preventing a downturn.
2.) A cultural norm that speculation must be punished.
The FED constrained itself, limiting its options for intervention, and was reluctant to be seen as rescuing those deemed 'immoral' market participants.
Both very good points.
Just to be clear, immoral market participants would include banks, insurance companies, people that purchase homes with credit, and any other folks making a lot of $$$ as asset values go up.
I’m sort of agnostic about what triggered (caused) the September 2008 financial crisis. Maybe the Fed should have been shooting for a bit more inflation. Maybe it was a Black Swan upsetting a lot of overleveraged financial institutions. At any rate it was a big demand shock that the Fed failed miserably to react to in time. It should never have allowed the price level to fall and for inflation expectations to remain depressed for years. As soon as it saw that people might expect inflation to fall below target, (based on past actions and policy statements, no one SHOULD have expected a fall in price level) the Fed should have reiterated it would do what it takes to keep inflation on target.
The _recession was certainly the Fed’s fault.
Really great, love how clearly you express the ideas. There are connections between the macro ideas you discuss here and ideas about how organisms develop and behave, surprisingly. I'll explore those ideas in future essays.
I really enjoyed your Less Online talk and the Q&A! Thanks for giving it.
Thanks!
As decidedly *not* an expert on macroeconomics, the far more likely explanation seem to me to be:
- "the Recession" was caused by the factors most economists traditionally name
- the "Great" portion (of "the Great Recession") *was* likely caused as you (Scott) suggest by tight monetary policy in 2008
I'm usually *not* a "split-the-difference" type, but in this case it seems wholly appropriate.
I'm genuinely somewhat surprised that neither you nor Tyler in his criticism/rebuttal of your take acknowledge that the above is more likely than either explanation alone.
It even seems to me you mostly mean what I suggest above, but for reasons I don't understand - perhaps your desire to emphasize the mistakes you believe occurred? - you don't seem much to mention even as a possibility.
If you've ever covered the above point in your writing, a link greatly appreciated.
You raise excellent, persuasive points, and I believe that looser monetary policy likely would have cushioned the recession, but I don't think that looser monetary policy would have addressed the critical underlying problem, which was not going away.
Yes, the failure of Lehman, in itself, would not create that much of a shock, but the panic which ensued was because the markets, politicians and the public suddenly became aware that the other banks faced the same underlying condition: too much leverage on financial products derived from real estate. Would looser monetary policy have facilitated the economy to outgrow that condition?
Thanks to the Basel II accords, the banks were allowed to leverage up the underlying mortgages, to unheard of levels. After the Fed called the banks downtown to pressure one to buy Lehman, then no bank would touch it after the covers were pulled back (and instead BofA bought Merrill), the markets correctly feared what that meant for the banking system.
Yes, it was terrible that the government initially bailed out Wall Street but as Warren Buffett pointed out: the patient was in cardiac arrest and demanded immediate care.
You are describing the conventional wisdom as to what APPEARED to happen in 2008. I agree that this is what appeared to happen. But it is not what actually happened. My point is that tight money caused NGDP to fall, which made the financial crisis much worse. People are confusing cause and effect---the financial crisis was actually mostly an effect of tight money.
The road was straight. The Fed turned the wheel.
If you view policy in terms of the monetary base, that is correct. Base growth slowed very sharply between July 2007 and May 2008.
I used your road/wheel analogy. A more nuanced analogy would be that the Fed spiked the punch with cocaine (zero percent money)* and then withdrew the entire punch bowl (raised rates rapidly). I feel this is true starting with at least the S & L crises. It was repeated in the 2008 housing crises (WaMu et. al). It showed up again with First Republic and Silicon Valley Bank.
*Personal note: back in 2007-2008 I got about 14 to 18 offers** to borrow money with zero percent interest and no fee charged. I had a mortgage that was about seven percent. Refinancing to a lower rate would have entailed large upfront charges. I accepted those offers and made minimum payments. I often updated a spreadsheet. Paying off old loans with new ones as new offers arrived - and they did. Literally all of my payments were applied to the principal. Eventually I got a HELOC with no upfront charges and a much lower APR.
** Banks I had never had business with -- Royal Bank of Scotland and too many others.
Scott,
a few points:
The main argument against your view, which I don’t see addressed, is that V is not constant and not independent of Fed policy, i.e. there is considerable uncertainty how its policies will impact the trajectory of NGDP. Doesn’t mean they should not try, but they are not omnipotent…
Further, the Fed simply does not have a reliable gauge of what NGDP is (the current jumps in the Atlanta Fed estimate are good example. Whereas there were signs of tightness in the summer of 2008, there also were signs of a booming (global) economy – a roofing oil price and a strong Euro that can also be interpreted as soft monetary policy (given USD’s role in global trade).
The analogy between the 1987 and 1929 is flawed, since I think there is a consensus that the first leg of the market crash in 1929 did not have a large economic impact. As you know, by March 1930, the market was only slightly down yoy.. It is the second leg of the crash and the global banking crisis 1931 that are usually seen as the “real deal”. Who knows how they 1987 crash would be judged had we had a global banking crisis in 1988 as a result of trade wars and other "real shocks"
I also think the moral hazard argument against bailing out financial markets every time they tank (1987, 1998-LTCM, etc.) is a valid one...
I completely agree on moral hazard. The Fed did not bail out the financial markets in 1987, they stabilized the macroeconomy. The Fed erred in 1998, as you say.
You misunderstood my point about 1929 and 1987. I don't believe the 1929 crash caused the Depression, and the 1987 crash is evidence for that claim. But the Depression began in the second half of 1929, and monetary policy failed to address it. I'm glad you agree on 1929, but most people are confused on the topic, which is why I mentioned it. (Robert Hall is a major economist, and he claimed the 1929 crash was a major financial crisis that led to the Depression.)
The second leg of the crash that you mention was itself caused by the Depression. If NGDP does not fall sharply in 1930, then there is no US banking crisis.
The first part of your comment does a nice job of explaining why the Fed should ignore oil prices and the $/euro exchange rate and focus like a laser on NGDP. Lags are an issue, which is why I favor market guidance and level targeting. Level targeting is the key, the reform that would have prevented the Great Recession. For a full explanation check out my book The Money Illusion.
A banking crisis is tight money in a round-about sort of way. Banks that were not already bankrupt tightened credit standards. Money available to borrow cant be borrowed. Assets that could have been sold to fund other purchases cant be sold.
Just because it wasn’t initiated by the Fed, doesn’t mean that money didn’t become scarce.
Whatever the mechanism, the Fed's job is to keep its targeted objective on target.
Sumner is spot on. N-gDp targeting can be corroborated by other metrics. Bernanke bankrupt America.
Maybe if you had a good teacher, like Dr. Leland J. Pritchard, you might understand money and central banking.
The academic community is delusional. All you have to do is dissect the data. Friedman gave us some good ideas. But those were incomplete.
The distributed lag effect of monetary flows, the volume and velocity of our means-of-payment money, are mathematical constants. As Dr. Richard G. Anderson put it, "reserves are driven by payments".
"The only relevant test of the validity of a hypothesis is comparison of prediction with experience." – Nobel Laureate Dr. Milton Friedman
This is how Bernanke bankrupt America:
2006 jan ,,,,,,, 45496 ,,,,,,, 0.04
,,,,, feb ,,,,,,, 43084 ,,,,,,, 0.01
,,,,, mar ,,,,,,, 41242 ,,,,,,, -0.02
,,,,, apr ,,,,,,, 42920 ,,,,,,, -0.03
,,,,, may ,,,,,,, 43648 ,,,,,,, -0.02
,,,,, jun ,,,,,,, 43278 ,,,,,,, -0.01
,,,,, jul ,,,,,,, 43328 ,,,,,,, -0.03
,,,,, aug ,,,,,,, 41162 ,,,,,,, -0.06
,,,,, sep ,,,,,,, 40865 ,,,,,,, -0.08
,,,,, oct ,,,,,,, 40088 ,,,,,,, -0.08
,,,,, nov ,,,,,,, 40543 ,,,,,,, -0.06
,,,,, dec ,,,,,,, 41461 ,,,,,,, -0.07
2007 jan ,,,,,,, 43113 ,,,,,,, -0.11
,,,,, feb ,,,,,,, 41214 ,,,,,,, -0.09
,,,,, mar ,,,,,,, 39159 ,,,,,,, -0.11
,,,,, apr ,,,,,,, 41072 ,,,,,,, -0.09
,,,,, may ,,,,,,, 42699 ,,,,,,, -0.05
,,,,, jun ,,,,,,, 42034 ,,,,,,, -0.05
,,,,, jul ,,,,,,, 41164 ,,,,,,, -0.08
,,,,, aug ,,,,,,, 39906 ,,,,,,, -0.07
,,,,, sep ,,,,,,, 40460 ,,,,,,, -0.07
,,,,, oct ,,,,,,, 40161 ,,,,,,, -0.04
,,,,, nov ,,,,,,, 40331 ,,,,,,, -0.04
,,,,, dec ,,,,,,, 41048 ,,,,,,, -0.04
2008 jan ,,,,,,, 42398 ,,,,,,, -0.07
,,,,, feb ,,,,,,, 41070 ,,,,,,, -0.05
,,,,, mar ,,,,,,, 39731 ,,,,,,, -0.04
,,,,, apr ,,,,,,, 41642 ,,,,,,, -0.03
,,,,, may ,,,,,,, 43062 ,,,,,,, -0.01
,,,,, jun ,,,,,,, 41616 ,,,,,,, -0.04
,,,,, jul ,,,,,,, 42083 ,,,,,,, -0.03
,,,,, aug ,,,,,,, 42055 ,,,,,,, 0.02
,,,,, sep ,,,,,,, 42456 ,,,,,,, 0.04
,,,,, oct ,,,,,,, 46930 ,,,,,,, 0.17
,,,,, nov ,,,,,,, 50363 ,,,,,,, 0.24
,,,,, dec ,,,,,,, 53723 ,,,,,,, 0.30
What about fiscal stimulus? Fed stimulus inevitably distorts behavior, exacerbating speculation and concentrating wealth. In the short term, some Fed stimulus was necessary; but commitments to future government spending would have limited the amount of Fed stimulus needed, by bringing future spending into current decisions, while creating actual useful infrastructure.
Just the opposite. Keeping NGDP growth along a stable path of 4% or 5% reduces the amount of financial instability. Fiscal policy increases the national debt, which causes all sorts of future problems. (BTW, It also worsens the trade deficit, although I view that as a phony problem.)
Don't confuse appropriate monetary stimulus that maintains steady NGDP, with excessive monetary stimulus (like 2021-22) that causes an overheated economy. The latter is indeed bad.
If resources become unemployed and as the borrowing rate falls, many activities that do not pass an NPV test at full employment do pass in recession. An income maximizing fiscal policy will therefore spend more. This may be called "stimulus" and certainly "looks" Keynesian, but it's just good neoclassical economics.