The WSJ goes in the wrong direction in “The slow-growth Fed”:
Yet the great paradox of this expansion is that the monetary policy that is supposed to spur faster growth hasn’t spurred faster growth. The nearby table compares GDP projections from the Fed’s policy makers with actual growth since 2011. The Fed has always been too optimistic—to a startling degree.
Economic forecasting isn’t easy, but it’s striking how consistently the Fed has been wrong in a single direction. Our guess is that the Fed gurus have been wrong because like so many in Washington and Wall Street they have overestimated the power of monetary policy to propel the real economy.
Some time ago I argued for the “opposite”:
I don´t think Keynes or Krugman despise (or hate) monetary policy. In fact, they believe it´s ´powerless in certain circumstances. On the other side the policymakers, the guys responsible for implementing monetary policy, also are fond of saying that monetary policy is powerless (when interest rates drop to zero). In this they are following Keynes who thought interest rates defined the stance of policy.
But the real reason is that, as policymakers they are afraid of the “beast” under their care.
The evidence for that claim is abundant…