Snail and squirrel

The Federal Reserve's Open Market Committee announced last week that it would plow the proceeds from its mammoth portfolio of maturing mortgage-backed securities back into the economy in the form of long-term government debt. One would think that such news is bound to put smiles on the faces of people like Paul Krugman. Instead, the embodiment of the so-called "liberal" conscience of America has chosen to intensify his attacks on the Fed, calling its move a "trivial change." As a spoiled kid who wants daddy to repair the broken bike right away so that he can race his buddies to the park, Krugman demands that the economy be fixed here and now. Dazzling our policy makers and other laymen with their theoretical models and hypothetical multipliers, retro-Keynesian economists are trying to persuade us all that the job market will quickly bounce back to its pre-2008 level if only we would pour "multiple trillions" down the same drain.

Krugman's distaste for the latest decisions of our monetary authorities has the same roots as his frustration with those conducting our fiscal programs. President Obama's unforgivable sin obviously lies in his unwillingness to push Congress to double or triple the "stimulus." To complicate the problem, instead of "credible commitment" to an inflationary environment over the next few years, Ben Bernanke seems too meek to crush the whistle-blowers around him such as Thomas Hoenig. Party-poopers like the president of the Kansas City Fed and yours truly have the ever-unpopular task of reminding people that the bike has been broken by years of improper use and hitting it with the hammer once or twice won't do the trick. Because of its huge inertia, monetary policy is not designed to fix past mistakes. It is very slow and forward-looking. It is like the snail that was climbing up a tree. A squirrel asked it: "Where are you going?" "I need to reach those branches to eat some fruit," answered the gastropod. "Fruit? Are you nuts!" exclaimed the furry creature. "Look around you---it's January and everything is frozen!" "Chill, darling, I know what I'm doing," the snail answered confidently. "I have to move now to get there just in time for the ripe cherries."

If only the Fed knew where the branches are. Or what month it is. Or at least what kind of tree it is climbing.