that was then... this is now...

Brad Delong

The difference between now and 1982 was that back in 1982 the interest rate on Treasury bills was 13.68%--there was a lot of room for the Federal Reserve to cut interest rates and so reduce unemployment via monetary policy. Today the interest rate on Treasury bills is 0.03%--there is no room for the Federal Reserve to cut interest rates, and so monetary policy is reduced to untried "quantitative easing" experiments.

The fact that monetary policy has shot its bolt and has no more room for action is what has driven a lot of people like me who think that monetary policy is a much better stabilization policy tool to endorse the Obama fiscal boost plan.