Comment by 7Figures2Commas | Hacker News Reader

Comment by 7Figures2Commas | Hacker News Reader

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7Figures2Commas

> ...the use of quantitative models and such. But without them, how can you measure the efficacy of your policies?

Here's a better question: if you measure the efficacy of your policies and find that they have not achieved the intended effect, on what would you base the extension and expansion of those policies? Faith? Insanity?

The reason I ask is that a few months ago, two senior economists at the SF and NY Feds published a letter, "How Stimulatory Are Large-Scale Asset Purchases?"[1]. Their conclusion:

"Asset purchase programs like QE2 appear to have, at best, moderate effects on economic growth and inflation."

Emphasis mine. For reference, QE2 involved $600 billion of Treasury purchases.

[1] http://www.frbsf.org/economic-research/publications/economic...

Right. There's no way to disprove theories that are tested in this way. Proponents of the theories being tested could always say that the attempt wasn't large enough, that the officials didn't believe enough in the policy, that the gods were angry that quarter, etc., etc. At some point you need a sound theory to draw back on that does not require this sort of testing to stand on its' own.

What is your argument exactly? You say, "If you measure the efficacy of your policies and find that they have not achieved the intended effect, on what would you base the extension and expansion of those policies?" But then your example, QE2, achieved the intended effect. As you say, it had a moderate effect on economic growth, and with only a moderate effect on inflation. Nobody claimed it would be a magic bullet. Monetary policy without coordinated fiscal policy can only have moderate effects.

And strangely enough, nobody outside of neoliberal bank-interest lobbyists has actually wanted quantitative easing. Keynesians want the labor market and consumer demand propped up, social democrats want infrastructure investment towards those ends, and radicals are looking for a debt jubilee.

Indeed, the term Keynsian has been uselessly spread to cover both New Deal style stimulus spending and printing money and giving it to the banks.

The two are not the same, they are connected only by the theory of trickle down Reaganomics.

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