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Comment by JumpCrisscross | Hacker News Reader

> if governments had focussed on spending money into the real economy instead, through infrastructure spending and real nation building projects

The Federal Reserve is an independent agency. It repeatedly implored Congress to increase fiscal spending. That didn’t happen, so monetary policy had to attempt to compensate.

> creating jobs

At least in America, we did a good job of this. Ben Bernanke navigated us away from an alternate history in which the GFC was a second Great Depression. In New York, the Hudson Yards are coming up as one of the biggest public works project since the Great Depression. Things could have been better, but they could easily have been a lot, lot worse without QE.

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We've done a pretty bad job at bringing back jobs. Labor force participation rate has fallen, while people are retiring later. Retirement/aging doesn't even help explain the drop. Especially since the younger generation has more than replaced the older one, and the older one isn't retiring at the same historic rate.

We're not in great shape, employment wise.

https://data.bls.gov/timeseries/LNS11300000

> We're not in great shape, employment wise

Almost everyone who wants a job has one. And real wages have been rising for a decade. That’s pretty good shape.

Labour force participation is a complicated question deeply intertwined with the opioid crisis, increased rates of college attendance, the mis-use of federal disability insurance and other factors. Quoting labour participation without reference to demographic shifts creating more retirees, moreover, mischaracterises the statistic. Demographically, there is no world in which 2018 LFP would have been higher than 2008.

Does your analysis account for quality of jobs available? I know a lot of overeducated/underemployed 30-40 year olds here in the Midwest.

> Does your analysis account for quality of jobs available?

I was responding to a claim that the government should have focussed on "creating jobs". In that context, the employment-unemployment line seemed most significant.

Real wages have been rising for a decade, so the central tendency for employed persons is better than it used to be (or than it was pre-crisis). There is still unemployment, particularly among the undereducated [1]. But from an average worker's perspective, it's one of the best economies we've seen in years.

[1] https://www.bls.gov/cps/cpsaat07.pdf

Have wages - cost of the same housing - cost of the same healthcare been rising?

From the worker's perspective, what you get paid is only half the story.

>Labor force participation rate has fallen, while people are retiring later. Retirement/aging doesn't even help explain the drop

Retirement/aging explains the largest component of the drop.

Much of the drop was predicted decades ago by Census based solely on demographics. The single largest factor in the current drop is exactly demographics. Here [1,2,3] are FRED papers on the topic with more references.

[1] https://www.stlouisfed.org/on-the-economy/2017/january/disse... [2] https://files.stlouisfed.org/files/htdocs/publications/revie...

[3] https://www.stlouisfed.org/publications/regional-economist/o...

This part of what you say is true:

"It repeatedly implored Congress to increase fiscal spending. That didn’t happen, so monetary policy had to attempt to compensate."

This part is not true:

"At least in America, we did a good job of this."

High unemployment should have been brought down in 2009 but instead did not come down till 2013. Labor force participation remains suppressed. Wages for men have been in decline for most of the period since 1973, and that only includes their monetary wages -- if you consider the decline in what's covered by health insurance, then the situation is even worse.

The situation since 1973 has been bad, and the situation since 2000 has been awful, and the USA has yet to show the political regeneration that will be necessary to turn this situation around and resume the broad based prosperity that the USA enjoyed during the mid-20th century.

> High unemployment should have been brought down in 2009 but instead did not come down till 2013

That doesn't match any graph I've seen. The unemployment rate shot up in 2008 and continued in early 2009, but from that point forward, it was a pretty regular, almost linear drop in the unemployment rate to today. Nothing special happened in 2013.

https://www.statista.com/chart/8974/us-unemployment-rate/

They could have been worse, but QE could have been constructed very differently to move funds to people first while still bailing out the banks. e.g. you get xx% of fed money on a mutual required refinance at a now lower principal. The bank gets some money, people keep the property with still loan, but now a much smaller payment & principal. It would have spent/printed a similar amount of money, but left a lot more wealth in the hands of people. Instead the QE program resulted in more mortgage defaults while transferring down pmts & other equity from people to the financial system.

> the Hudson Yards are coming up as the biggest public works project since the Great Depression

It'd be impressive if a development project in NYC ends up costing more than the interstate highway system.

Ben Bernanke was responsible for the financial crisis of 2008. He was part of the group of people that wilfully and knowingly created the conditions for the crisis to erupt, becoming handsomely rich in the process. The suffering of billions of people is on his hands and those of similar ilk.

> people that wilfully and knowingly created the conditions for the crisis

This is unnecessarily conspiratorial. Particularly given the proximate causes of the crisis erupted from domains over which the Federal Reserve had pretty much zero pre-crisis oversight (broker-dealers and insurers).

Did Greenspan's policies throw fuel on the fire? Yes. Was that done to create a crisis? No.

I think a legitimate question is whether there was political motivation to inflate W's economy, and whether he should have known the consequences.

From wikipedia (and Barrons):

His dissertation is not available from the university[17] since it was removed at Greenspan's request in 1987, when he became Chairman of the Federal Reserve Board. In April 2008, however, Barron's obtained a copy and notes that it includes "a discussion of soaring housing prices and their effect on consumer spending; it even anticipates a bursting housing bubble".[18]

2002:

> 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.

https://www.nytimes.com/2002/08/02/opinion/dubya-s-double-di...

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