The excuse will be “Trump had to deal with the coronavirus!”
Which of course is true.
But it doesn’t change the fact they were livid about low interest rates and yuuge deficits (deficits the same as today almost) during the financial crisis
What can they do? The Fed used up its ammo on the Great Recession dropping the rates to zero and quantitative easing. It is true interest rates rose some afterwords but no where near as close as interest rates before the recession. All they can do is pull the helicopter Ben Bernanke and blanket the banks with money.
Whether it’s a month a year or five years the debt can was kicked down the road we will enter an era at best of Japanese style stagnation with negative interest rates. They have no choice but to lower the rates when spending slows and even when the economy is rocking we are still having to pay an insane amount of interest on the debt.
We might find out the golden years of economic wealth and growth was from 2009-2020.
Not much at this point. Instead of using a healthy economy for contraction, expansionary fiscal policy kept going full steam ahead. Instead of making the smart choice to restore financial buffers for future economic downturns, we lived for the moment. Now there is no room for expansionary policy and virtually no room for interest rate cuts.
Call me chicken little, but if things head south it will make the 2008-2009 recession look like a bump in the road.
No catch 22, just an unpopular move. During times of economic prosperity, increase government revenue (taxes) and/or decrease government spending (cuts). Yes, this typically decreases demand, but would give a buffer for raising interest rates. If you abhor contractionary fiscal policy, at least have the guts to raise interest rates. Or vice versa. Or end up in the mess we might face.