“THE people have spoken. The bastards.” Dick Tuck’s reaction to defeat in a Californian state Senate race in 1966 is not that far from the attitudes of the authorities since the 2008 financial crisis. They have tended to act first, and hope that voters approve of their actions afterwards. Often this has involved the introduction of improvised measures that the people might not have favoured, and the use of bodies that were free from democratic constraint.
The unpopularity of the Bush administration’s bank bail-out in 2008 created a strong sense of caution among elected leaders. Congress initially voted the rescue down in response to a backlash among constituents that eventually created the Tea Party. Although the bail-out was pushed though in the end, many of those who voted in favour lived to regret it.
Given the public’s views, letting the central bank take the main role in generating economic recovery made a lot of sense. Getting Congress to sign up to further fiscal stimulus became impossible after the Republicans took control of the House of Representatives in 2010. The Federal Reserve kept interest rates at historic lows and...
from The Economist: Finance and economics http://ift.tt/1TTKYXt
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