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President Obama's Former Top Economic Adviser, Christina Romer: A Weaker Dollar Is Good For America

Saturday, April 9, 2011 - 1:38 PM
An opposite view from that of the Fed's Fisher... 

 

http://finance.yahoo.com/blogs/daily-ticker/bring-qe3-t-afford-not-more-romer-says-20110407-045249-959.html

 


With unemployment still near 9% and the "real" unemployment rate at 15.7%, "we can't afford not to do more," Romer tells me in the accompanying video. "For heaven's sake with this many people unemployed — think of what it's doing to government revenues and support payments. If all you're worried about is the budget deficit, it's really important" to put people back to work.

 In terms of specific policies, Romer recommends a payroll tax holiday for corporations - rather than workers. Because "firms respond to incentives", making it less expensive would encourage them to do more hiring.

Romer also wants more action from the Fed, which has already taken extraordinary measures to boost the economy and financial markets.

"What I'd like is for the Fed to come at the unemployment problem with the same passion as when the financial system was in such distress," she says.

It's a "mistake" for the Fed to end QE2 in June as planned, Romer continues. "The evidence is it's been very effective. I don't understand why we'd be dialing back that tool."

Despite the recent rise in Treasury rates, QE has been effective at lowering long-term rates, she says, citing academic research such as a new report from the NY Fed entitled: Large-Scale Asset Purchases Were Effective at Lowering Borrowing Rates.

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MikeMike327 posts since
Feb 22, 2010
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