"Here is an embiggened version of the infamous jobs chart prepared by Obama administration economists Jared Bernstein and Christina Romer back in January 2009 (and now updated again by me with data from the August jobs report)."
Interpreting the Unconventional: U.S. Monetary Policy of 2007–09
"This paper reviews the unconventional U.S. monetary policy responses to the ﬁnancial and real crises of 2007–09, dividing these responses into three groups: interest rate policy, quantitative policy, and credit policy. To interpret interest rate policy, it compares the Federal Reserve’s actions with the literature on optimal policy in a liquidity trap. This comparison suggests that policy has been in the direction indicated by theory, but it has not gone far enough. To interpret quantitative policy, the paper reviews the determination of inﬂation under different policy regimes. The main danger for inﬂation from current actions is that the Federal Reserve may lose its policy independence; a beneﬁcial side effect of the crisis is that the Friedman rule can be implemented by paying interest on reserves. To interpret credit policy, the paper presents a new model of capital market imperfections with different ﬁnancial institutions and roles for securitization, leveraging, and mark-to-market accounting. The model suggests that providing credit to traders in securities markets is a more effective response than extending credit to the originators of loans."
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