Stephanie Kelton with an NYT editorial on why the deficit doesn’t matter, but the economy does:
The trick is to adjust the budget to make efficient use of the people, factories and raw materials we have…. But all of this goes unrecognized on Capitol Hill, where the very words “debt” and “deficit” have been weaponized for political ends. They serve as body armor to politicians who would deny resources to struggling communities or demand cuts to popular programs.
Mark Dow on the distinction between liquidity(i.e. the recent quantitative easing at the Federal Reserve) vs credit in banks– then, if reserves are not used directly to prop up the stock market, and if the Federal Reserve keeps yields low for the future to encourage people to put their cash to work, it would be safe to assume that the policy is working to keep inflation low; yet, my perception is that demand is weak and unemployment is higher than desirable(where’s the beef?):
The other, more mechanical, implication is that financial sector lending is neither nourished nor constrained by base money growth. The truth is the Fed’s monetary policy can influence only the price at which lending transacts. The main determinant of credit growth, therefore, really just boils down to risk appetite: whether banks and shadow banks want to lend and whether others want to borrow. Do they feel secure in their wealth and their jobs? Do they see others around them making money? Do they see other banks gaining market share?