Harvard's Miron sees QE2 as setting us up for Japan type anemic growth; stimulus dough is distributed politically
Harvard economist Jefferey Miron on the Fed's QE2 and economic stimulus. Some of the more noteworthy quotes, via Yahoo:
Unfortunately, "we're set up for exactly the same type of slow growth and long-term stagnation that Japan had," Miron says. Despite all the talk about how the U.S. policy response to the 2008 crisis was different than Japan's to the bursting of its credit bubble in 1989, he notes "we haven't really cleaned up balance sheets of all the banks [either]."
In addition to having failed to address the core of the crisis, Miron says two major issues holding back the economy:
No Confidence: "It's people's concerns about the future - the fear [that] demand is not going to be there that's causing this anemic recovery," he says, noting corporations already have ample cash (around $1 trillion) to hire and expand.
Policy Missteps: Like many conservatives, Miron believes the Obama administration is more focused on "redistributing the pie" vs. growing the pie. "You never hear ‘we need to do things like keep tax rates on capital income low,' and other incentives to keep people productive," he says. "That's part of what the private sector is missing and why we're not going to see growth for a while."