The US economy is a car stuck in mud. The monetary Fed is at the pedal. The fiscal Congress is standing outside, refusing to push. With no help from Congress, the Fed is basically spinning wheels hoping to gain traction.
Aside from that, the main goal of QE is to unfreeze lending by removing assets on lenders' balance sheets and replacing them with lendable cash. This aspect of QE is working.
But the true problem is not monetary, it is fiscal and more profoundly structural. ...
The middle class has been destroyed by NAFTA and GATT. They are being forced to give up on wages and benefits in order to compete with foreign workers who have no safety or pollution standards, health benefits, and are willing to work for peanuts!
It's been bad for the US trade balance too. The dollars go overseas and then are lent back to us. That is an unsustainable system. Keynes was very worried about trade imbalances and one wonders why modern Keynesians never mention that!
Mizesaw, yes, about trade imbalances: notice that about midway through this course of change, Federal stats changed from gNp to gDp?
That was because GNP has been destroyed by trade imbalances.
As far as Keynsians go, they are irrelevant. This is the age of monetarism and Milton Friedman. History will not speak well of these times.
The trade imbalances make no sense micro- or macroeconomiclly.
They can better be seen as either geopolitical strategy or as Outright incompetence of our academics and managers.
Better fiscal policy would help but the Fed can increase aggregate demand by increasing the money supply which is what QE does. The primary goal of fiscal policy should be to redistribute wealth. It can also increase velocity but the primary driver of demand is the quantity of money.
YOU FAIL ECON 101.
You completely ignored two MAJOR reasons for the slow economic growth:
1. Population Demographics, the baby boom is saving for retirement instead of buying new homes, cars, TVs, etc. Look at the 1970s when the boomers were coming of age.
2. Middle class income, adjusted for inflation has not grown for over 15 years while energy, housing, health care and college costs are up triple digits percentage wise along with exec pay.
The truth_stinks, you do have a point about immigration dynamics, particulrly during this slack period when immigration of younger people is curtailed due to high unemployment. Until this curtailment, there were projections that the greying phenomenon experienced most strongly by other G7s was being mitigated by immigration of young people. In any event, the greying of the boomers could be a drag on the economy, but do you seriously think thats the reason for high unemployment now?
Your second point is exactly what I am talking about. Incomes have stagnated for all but the top 10 percent.
Thank you for adding that, as it is a point I should have mentioned in the original post.
Our Federal Gov't has become a huge drag on the economy, and is totally divorced from market forces. Our President and much of the ruling class of 'Versailles on the Potomac' seek only to expand it's size and influence, sucking even more blood out of the private sector. In fact, it can be argued that it's amazing how well the private economy is doing in spite of the drag of the Federal Gov't (and states and locals to) There is a good part of the answer - The Plantation Politics of our time. And even the 'free marketeers' of Wall Street are on the Plantation.