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April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review August 9, 2013 / 3 Elul, 5773

America's bubble of complacency

By Michael Gerson



http://www.JewishWorldReview.com | The impending replacement of the chairman of the Federal Reserve has taken on elements of a political campaign, with members of Congress endorsing candidates and financial bloggers strafing rival monetary camps. One half expects to see ads go up in Iowa: "Janet Yellen: Inflation's best friend," or "Larry Summers: In your heart you know he's skeptical of quantitative easing."

This spectacle should not be allowed to distract from a reality indifferent to the views (or gender) of the next chairman: We are reaching the limits of monetary policy. And few know what lies beyond it.

For evidence, listen to the central bankers themselves. European Central Bank President Mario Draghi recently said, "Monetary policy cannot create real economic growth. ... The ECB has done as much as it can to stabilize markets and support the economy. Now governments and parliaments need to do all they can to raise growth potential." Outgoing Fed Chairman Ben Bernanke has been gently suggesting there are limits to what the Fed can accomplish and warning against counterproductive fiscal policies and confidence-shaking political confrontations. Jeffrey Lacker, president of the Richmond Federal Reserve, argues that economic growth is limited "in large part, by structural factors that monetary policy is not capable of offsetting."

America's central bank has been engaged in a massive, partially successful experiment. In 2008, it arguably saved the country from a ruinous depression by pumping electronically printed money into the economy to get frozen credit thawed and flowing. Then an emergency measure was transformed into an economic policy tool. The Fed has attempted to promote economic growth and job creation by making regular, large-scale purchases of government and corporate bonds -- now at $85 billion a month -- in order to reduce the cost of long-term borrowing.

After five years of historically low interest rates and aggressive asset purchases, the results are mixed. The housing market and the stock market have clearly benefited (stock values have more than doubled since their bottom in 2009). Loose money makes riskier investments more attractive. And inflation fears have not (so far) been justified. But job creation and economic growth remain weak -- significantly weaker than previous recoveries. We have a booming stock market grafted onto an anemic real economy. This has been a good deal for those who hold assets; not so good a deal for those who depend on wages.

Eventually, by nearly universal admission, this policy has diminishing returns and growing risks. Propping up stock and home values, however advisable during an economic crisis or downturn, does little to improve long-term economic fundamentals. And easy money involves the risks of speculative bubbles and future inflation. So the Fed has begun signaling that monetary stimulus will not last forever. A tapering in bond purchases could begin in the fall. The next Fed chairman will have the unenviable task of removing the training wheels from markets without causing a crash. To strain another analogy, he or she will test if easy money has been a caffeine high or a heroin high, with the consequences of withdrawal ranging from unpleasant to debilitating.


The larger risk of loose money is not in causing problems but in hiding them. High stock prices and positive (but slow) economic growth create a political atmosphere in which long-term structural problems can be ignored or avoided. I'm willing to admit that monetary and fiscal stimulus can help smooth out economic cycles. But these instruments do not cause economic development, which ultimately depends on factors such as the quality of education, the skills possessed by workers, technological innovation, modern infrastructure, reasonable regulation, predictable taxation and proper incentives for work and investment.

Other nations seem to be relentlessly focused on the need to innovate and compete. See the German approach to vocational education or the South Korean emphasis on educational outcomes.

But in the American political system, there is scant evidence of comparable seriousness. Our schools wallow in mediocrity -- while some Republicans spin ideological conspiracy theories about common core standards. Our health system imposes a serious economic burden of waste -- perhaps 30 percent to 50 percent of total spending -- which Democratic reform hardly addressed. There is little prospect of fundamental tax reform, which some economists estimate might add 0.5 to 1 percentage point in GDP growth. Or for putting entitlement spending on a sustainable path, which might remove some uncertainty about future tax rates and economic conditions.

Our politics seems to be in worst sort of bubble -- a bubble of complacency. And all bubbles eventually burst.

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Previously:



07/01/11 The GOP's ideal America
03/04/11 The last doughboy and the emergence of a great nation
03/01/11 Conservatives shouldn't be so surprised by freedom
02/22/11 The progression of pain
02/18/11 The seriousness primary
02/11/11 Do Egypt's protests mean American decline?
01/27/11 No-bend Obama
01/21/11 Two good arguments for civility -- and passion -- in politics
01/11/11 Obama's staff changes give him a second chance
01/11/11 Is Arizona shooting an empty search for meaning?
01/07/11 WikiLeaks gives dangerous ammunition to a tyrant
01/04/11 Michael Vick: Symbol of the second chance
12/28/10 Social Security reform is the answer to Obama's problems --- and the nation's
12/21/10 When foreign policy realism isn't realistic
12/17/10 When it comes to politics, Obama's ego keeps getting in the way
11/26/10 Libs resort to conspiracy theories to explain Obama's problems
11/19/10 With Holder at the helm, detainee policy is a disaster
11/12/10 Blue-state budget crises spell even more trouble for Dems
10/19/10 Obama the snob
10/12/10 Seeds of victory in Afghanistan
10/05/10 Believers' remorse
10/04/10 Pound-foolish on national security
09/28/10 Babylon on the Potomac
09/27/10 Our reluctant commander in chief
09/21/10 Blue strongholds are becoming Democratic graveyards
09/17/10 For the GOP, a bittersweet brew from the Tea Party
09/15/10: Insanity's great enablers
09/13/10: The lost communicator
09/08/10: Will 2010 midterms be 1994 all over again?
09/01/10: Obama's economic wandering
08/27/10: Miracles from abroad
08/25/10: Address these issues in order to strengthen the Tea Party
08/20/10: The lost promise of Barack Obama
07/23/10: Obama's greatest nightmare
02/04/09: The Reality of Innocence
01/07/09: The Risks in Obama's Ambitions
12/31/08: Support Obama Will Need
06/13/08: Prince Charles, Organic Conservatism Icon
06/11/08: No longer a bankrupt political joke but still overshadowed
04/23/08: McCain's anger management
04/10/08: A Country for Old Men
03/06/08: Does the America Need a Hug?
03/06/08: Obama's First 100 Days
02/29/08: Words Aren't Cheap
02/22/08: He Said, They Said
02/20/08: Dying silently in Zimbabwe
02/15/08: Hillary's Unappealing Path
02/13/08: NATO's Afghan Stumbles
02/08/08: Why McCain Endures
02/06/08: One surge that led to another
02/01/08: In North Korea, Process Over Progress
01/30/08: Compassionate to the end


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