Fed chief Ben Bernanke doesn’t see a bed of roses carpeting the economy in the future, but he doesn’t see another recession either. So, he’s recommending we stay the course. Good enough. As I’ve noted before, the economy is going through a significant reshuffling and recalibration of assets as a result of the housing bust and financial crisis. It’s going to take a while to sort it out, and misguided fiscal stimulus, whipsaw budget policymaking, and an anti-business policy climate (including in key agencies such as the National Labor Relations Board) are not helping.
Right now, the economy needs policy stability, not ad hoc actions by the Fed (through monetary policy) or the federal government (through fiscal stimulus). While I would not go so far as to say the “fundamentals” of the economy are sound, as Bernanke did in Jackson Hole, Wyoming, the most prudent policy is to provide clear, transparent information to markets about policy to minimize uncertainty and let the private sector get back to what it does best: identifying opportunities for new value creation.
— Samuel R. Staley is associate director of the DeVoe L. Moore Center at Florida State University and a senior research fellow at the Reason Foundation.