Fed Inadvertently Admits Trickle Down Works

Started by Solar, June 08, 2013, 08:08:41 AM

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Solar

I love it when their policy is contradicted by reality. :biggrin:

Why is the Obama recovery the weakest recovery since the Great Depression? According to a new study by the Federal Reserve Bank of San Francisco, it is not because the federal government failed to borrow and spend too little during the height of the economic downturn.

In fact, the San Francisco Fed reports that "federal fiscal policy was unusually expansionary during the Great Recession" thanks largely to the "American Recovery and Reinvestment Act, the economic stimulus program passed by Congress in 2009. As a consequence, federal government saving in the recession fell faster—that is, the deficit grew faster—than our historical norm would predict."

The San Francisco Fed does note that after the recovery began "fiscal policy sharply reversed course" and has since been "much more contractionary than normal." But in total "federal fiscal policy has been a modest headwind to economic growth so far in the recovery, but no more so than usual given the weak pace of growth."

http://washingtonexaminer.com/article/2531410
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