The Sumnerian Missionary
I don’t think conservatives realized it at the time, but I (and a few
other quasi-monetarists) had the strongest argument against fiscal
stimulus in late 2008 and early 2009. We said; “Yes, stimulus is
needed, but monetary stimulus is much more effective and less costly
than deficit spending.” At the time, most on the left argued that
monetary stimulus wouldn’t work if rates were near zero. Well rates
are still near zero, and many of those same liberals are now insisting
that the Fed is responsible for fixing the AD shortfall. They’ve come
over to our side.
My main quibble: I suspect that top-tier liberal economists favored fiscal stimulus because they saw a golden opportunity to push big government, not because they saw a technical problem with monetary policy. Uncharitable I know, but I see no other way to explain their sudden change of heart.