You may remember a recent post where I outlined the story that will come from Keynesians after the next round of QE does not have the desired effect. Lo and behold, Paul Krugman is already setting the stage:
“…we actually can hope that the Fed’s new policy will boost housing as well as operating through other channels, and therefore that it can act more like conventional monetary policy in fostering recovery.
That said, I’m still skeptical about whether monetary policy alone can come close to doing enough…”
Bob Murphy finishes the story by dredging up Krugman’s position way back when:
“To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”
