Thread by @JWMason1

I fully endorse this piece by my colleague @rortybomb. Powell has overseen a dramatic shift in macroeconomic thinking at the Fed. It's far from certain it would have happened without him, or would be sustained under someone else. rooseveltinstitute.org/2021/08/16/pri…

It was Powell who decisively abandoned the "stars" - the so-called natural rate of unemployment and neutral interest rate - that had constrained thinking at the Fed for a generation. Maybe Yellen would have gotten there too - we'll never know. But it was Powell who actually did.

Powell has also been the first Fed chair in a generation, if not ever, to recognize the importance of demand conditions to income distribution, and the Fed's responsibility to take that into account. rooseveltinstitute.org/wp-content/upl…

The shift in thinking that has happened under Powell might be maintained and extended under a replacement. But it also might be reversed, which would be a disaster for the whole progressive project. Treating macro as settled and focusing on financial regulation is a mistake, imo.

To be fair, the arguments over macro policy have been well-aired. What's new in Mike's piece is his defense of the much-maligned "bailouts". First he argues that the municipal facility didn't have to make loans - its existence was enough to lower rates for states and localities.

The business lending program also reduced rates out of proportion to actual loans. But bigger issue there is, what's the counterfactual? If alternatives for pandemic-hit businesses had been nationalization or bankruptcy, would workers (or progressive project) be better off today?

I feel obliged to state for the record that neither Roosevelt as institution nor Mike or I as individuals is taking a position in support of (or against) reappointing Powell to the Fed.