On CNBC today, Carl Quintanilla asked vice presidential candidate Paul Ryan if he thought today’s disappointing jobs report would inspire a third round of quantitative easing — the monetary stimulus the Federal Reserve has engaged in off and on since the recession. Ryan replied by saying that the costs of quantitative easing “are clearly outweighing the benefits”:
RYAN: I’ve known [Fed Chairman Ben Bernanke] a long time. He and I have disagreements on these issues, but they’re respectful of one another. I think QE3 — I think QE — the costs outweigh the benefits in my personal opinion. But I think this lackluster report probably increases the likelihood… But at the end of the day Carl, all this easing is simply, in my opinion, the Federal Reserve trying to bail out bad fiscal policy. And I think the costs are clearly outweighing the benefits of this.
Ryan’s assessment is simply bizarre. The “costs” Ryan is referring to are presumably higher inflation rates, which he’s repeatedly warned are just around the corner ever since the Fed began using QE. Inflation has stubbornly refused to comply with Ryan’s predictions, however. Ever since the recession, it’s stayed right around the Fed’s preferred target of two percent:
And controlling inflation is only one half of the Fed’s dual mandate. The other half is keeping unemployment low. As the chart above shows, there’s been some progress on this front, but the country remains in an employment crisis.
Federal Reserve Chairman Ben Bernanke recently argued that the first two rounds of QE added as many as two million jobs to the economy. That would certainly count as a sizable benefit. Even if this is an overestimation, there’s simply no evidence of negative costs from QE that would suggest reticence from the Fed is the right course. And there are millions of unemployed Americans that suggest another crack at QE is more than called for.