"“It isn't the crisis. It's the post-crisis when you don't adjust your policy back to normal.”"
"“While they were doing quantitative easing en masse during those years, real productivity in the economy went flat and real wage increases went flat. You had to have, you had to be an asset holder to be a winner.”"
"“The Fed's balance sheet ballooned, asset markets ripped, and the wage earner standing outside the asset economy got nothing for the wait.”"
"“The 1970s Fed under Arthur Burns refused to tighten meaningfully, convinced inflation was a transitory cost-push problem rather than a monetary one. The result was a decade of stagflation that took Paul Volcker and a brutal recession to break.”"
Zero interest rates became a long-lasting feature after 2008, lifting many asset prices. A Federal Reserve policymaker who voted against the policy repeatedly argued that the crisis response was defensible, but the failure to return policy to normal was more damaging. The period of quantitative easing coincided with flat real productivity and flat real wage growth, rewarding asset holders while leaving wage earners with little improvement. Similar outcomes are cited from the 1970s, when the Fed under Arthur Burns delayed meaningful tightening and contributed to stagflation, and from Japan after 1989, when emergency accommodation was extended for many years, producing prolonged stagnation.
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