Thread by @Noahpinion

1/It's totally true that the U.S. made some big macroeconomic policy mistakes in the 2010s: stimulus too small, austerity too soon, failure to bail out homeowners.

But we shouldn't let this obscure the good that policy did.

slate.com/business/2019/…

2/The stimulus was too small and ended too soon, but it made 2009-10 a lot less ugly than it easily could have gotten.

3/Even more than Congress, the Fed's decisive action probably saved us from a replay of the Great Depression. The Fed:
1. Lowered rates to 0 immediately instead of in gradual steps
2. Unleashed massive QE
3. Did both explicit and stealth bailouts of banks around the world

4/The Fed unleashed this massive QE - and the experimental "QE infinity" - in the face of truly fierce opposition from inflationistas, hawks, and hard-money people:

uneasymoney.com/2014/10/28/jus…

5/Compare our performance with that of Japan.

It took the U.S. about 3 years for the labor market to start recovering after the initial shock.

Japan's unemployment KEPT RISING FOR A DECADE after its bubble burst!!

6/In 2019, the U.S. labor market was back to where it had been before the crisis.

That took 10 years.

In Japan, it was more like 20.

7/And while our austerity in 2011-2013 was indeed very stupid, it wasn't as bad as FDR's austerity in the Great Depression.

Our austerity slowed our recovery a bit, but FDR's mistake threw the country into a second recession.

rooseveltinstitute.org/repeating-our-…

8/So could we have done better during and after the Great Recession?

Absolutely.

But did we do better than Japan did in similar circumstances?

Yes we did.

And did we do better than we did in the Great Depression?

Yes we did.

9/And after reading @adam_tooze's book about the Euro crisis, I'm pretty sure we also responded much better than Europe did.

amazon.com/Crashed-Decade…

10/So while folks are right to criticize us for not doing more than we did, the truth is that we did a better job with macro policy than almost any country or region in similar circumstances - including our past selves!

That needs to be recognized.

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