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You have no doubt been told that the global economy is recovering. But the recovery argument rests, in part, on the Fed using the wrong meter for growth. The Fedテ「ツツ冱 dual mandate requires it to maximize employment while controlling the rate of inflation. Fed Chair Ben Bernanke and his governors have been comfortable with inflation at a maximum of 2 percent annually, a cue followed by other bankers in the developed world. The problem with this, argues Reid, is that if inflation comes in at anything less than 2 percent, the Fed notches a win. If inflation is 1 percent, the price level is not as high as it would have been at 2 percent. The Fed has left economic growth on the table. Focusing on nominal GDP targeting would keep this from happening, assuming that the Fed can actually make up for lost ground through unconventional stimulus. As we have seen, the Fedテ「ツツ冱 typical stimulus response, which is to lower short-term interest rates, has its limits because rates canテ「ツツ冲 go lower than zero.
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House Minority Leader Nancy Pelosi, D-Calif., called the Republican-led bill "a new low." Rep. Rosa DeLauro, D-Conn., said it was "immoral." Rep. Jim McGovern, D-Mass., echoed the sentiment. "It stinks," McGovern said at a press conference Tuesday. "It wasツjust cooked up in the Majority Leader's office, some sort of Heritage Foundation fever dream."
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The largesse underscores the thinking among politicaloperatives, lobbyists and special interest groups: When it comesto elections this year, Virginia is the only game in town. Thebiggest U.S. political contest of 2013, to take place Nov. 5, iswidely seen as a testing ground for next year's congressionalmid-term elections.
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