I really liked Ezra Klein’s review of Ron Suskind’s book in the NYRB for its wholesome focus on monetary policy errors as the most plausible way the Obama administration could have made things better. Nobody was stopping them from replacing Ben Bernanke with someone more committed to full employment, and it seems likely that they could have filled two existing Board of Governors vacancies with people more committed to full employment. If the chairman and those two empty seats all felt the way Charles Evans feels, we’d be in much better shape today. None of that is to deny that fiscal policy could have been better, but as Klein says the key blocking points on fiscal policy were in Congress.
That’s not to deny that other mistakes were made. There was a premature rhetorical pivot to the long-term budget deficit. The banking situation as not been handled optimally. One could go own. But the Federal Reserve is the U.S. government’s primary recession-fighting agency. You need to staff it with the right people if you want to fight recessions the right way.