Animal Spirits

Via Greg Mankiw:

I caution against an unduly psychological view of the macroeconomy, but the point is that whether you look at consumer surveys, or market interest rates, or market expectations of inflation you keep getting this same result. We’re stuck on an equilibrium of sluggish growth, and a price level that’s way below trend. Policymakers need to get their s**t together and reinflate the economy in a determined way.