Laura Ingraham was understandably baffled. She assumed that someone from the American Enterprise Institute and National Review who came on her mega-popular radio program to talk about the Federal Reserve would surely bash its decision to keep buying Treasury bonds and mortgaged-backed securities. Consensus — maybe near unanimous? — opinion on the right judges the Fed’s “quantitative easing” to be at best a benignly useless effort and at worst a temporary fillip that risks creating dangerous bubbles and inflation. It’s the Bernanke Band-Aid over the awful Obama economy.
Instead, her guest — whose names rhymes with “Sethokoukis” — approved of the Fed’s surprise move. Low inflation and high unemployment, he explained, meant that now was a poor time to tighten monetary policy. He added that stocks rallied on news of the Fed decision because investors knew tapering would further slow an already anemic economic recovery.
Ingraham was having none of it. “What about the argument that the run-up in the market is not tied to American GDP at all?” she asked. “Essentially this is a false high, a temporary high, a sugar high. . . . You’re one of the few people I have heard talk about this as a healthy recovery. . . . The middle class has less hope in its future. . . . You have to wonder if the pain that is ultimately going to happen is being delayed by this manipulation of where we really are.”
Other right-of-center talk-radio hosts offered their versions of Ingraham’s exasperated response, though they perhaps presented their thoughts less vigorously, as their AEI-NR guest made the case that QE, though hardly optimal policy, was doing some good and was worth continuing.
Here’s what explains the disconnect: Some economists believe the slow-growth, jobless recovery is partly a sign that the economy’s growth potential has fallen since the late 1990s. Demographics, education, regulation, taxation, technology, and globalization are among the possible structural reasons. All that stuff, however, should be filed under “Not the Fed’s Business.”