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bad_luck
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That will depend very much on who’s in the White House and in Congress. I think if we have the present political conjunction, there’s a very serious risk it will be handled worse, because what is necessary is more fiscal policy. Anybody who looks at our roads and our bridges says there is room for spending that would not strain the economy. Anybody that looks at our ability to borrow would say that there’s no risk—we can borrow at a negative real interest rate. So that’s clearly what should be done. But if we had another crisis, it’s likely that Congress, as it’s constituted today, focused on the larger deficit, may be even tighter and less willing to give a stimulus. And it’s unlikely that the Fed would be willing to engage in a magnitude of quantitative easing that would be effective. And even worse, you can’t bring interest rates lower than zero. They’re now zero. So we don’t have another gun. One might say we’re out of ammunition. 
8/25/2015 1:59 PM
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