Considerable media attention has been drawn today to an "Open Letter" to Fed Chairman Ben Bernanke by various economists and other experts opposing the Fed's quantitative easing announced earlier this month.
SBE Council chief economist Raymond J. Keating noted: "This letter is right on the mark in pointing out that the Fed's planned asset purchases will do nothing in terms of boosting employment, while clearly further raising the risks of debasing the dollar and hiking inflation. It's also correct to note that changes in tax, spending and regulatory policies are needed to help get the economy moving.
"That does not mean more government spending. Nor does it mean targeted and temporary tax measures. As many of us predicted, such measures, combined with loose money, over the past three years have accomplished nothing in terms of enhancing economic growth.
"What the U.S. economy needs to boost entrepreneurship, investment, growth and job creation are government spending cuts in order to get resources out of political hands and into the private sector; substantive and permanent tax and regulatory relief to boost pro-growth incentives; free trade agreements to expand opportunity; and monetary policy refocused on price stability in order to limit future inflation woes."