Three strikes against the Federal Reserve

Stockpiled: bank reserves were, in the main, lying idle

President Barack Obama’s administration, the Federal Reserve and independent economists have to answer a central question about the US recovery: why did the enormous sustained monetary stimulus have so little effect on real output, employment and prices?

My answer comes in two parts. First, the Fed’s policy is based on major economic errors. It has tried to resolve real economic problems by printing money, but its staff should know this is not possible. Second, the real problems were created by

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