With fiscal policy hamstrung by public debt in both the E.U.
and U.S., monetary policy was a major beneficiary of the financial
crisis of 2008 and the ensuing state-debt crisis that stammered on at least until
2013 in Europe. Lest it be concluded that central bank policy had reached an
unassailable peak of salvation, the expanded role actually made its limitations transparent, at least in financial circles.
The full essay is at "Post Financial Crisis Coordinated Action."
As Summer slid into Autumn in 2012, the Chinese
government was giving no hint of any ensuing economic stimulus program. This
was more than slightly unnerving for some, as a recent manufacturing survey had
slumped more than expected, to 49.2 in August. A score of 50 separated expansion from contraction. A similar survey, by HSBC, came in at 47.6, down
from 49.3 the previous month. Bloomberg suggested that China might face a
recession in the third quarter. So why no stimulus announcement? Was the Chinese government really just one
giant tease? I submit that the false dichotomy of moderate economic growth and full employment was in play. In short, the Chinese government did not want to over-heat even a stagnant economy even though the assumption was that full employment would thus not be realizable.
