Two pieces of news caught your pie-maker's eye this week, and it's hard to say which is more significant:
(1) We just witnessed our third "wave" election in a row.
(2) The Federal Reserve is going to print another $600,000,000,000 (that's $600billion)
Both are a reaction to the perception that the US economy is in terrible shape, and I think both will prove remarkably ineffective. Neither the Republicans nor the Federal Reserve have the authority or will to break the politics of stasis in which we find ourselves today. Both will warn of the dangers of large, continuous Federal deficits, but both rely on them for political support or policy tools, respectively. Both count on a large increase in consumer spending to make their economic models work, and all will be disappointed on that score.
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