Stephanie Flanders is pretty excited by the decision by the US ‘Fed’ decided to pump $600 bn intothe US economy.Whilst the rest of the media reported that just about everyindustrial country in the world was outraged by the US move ‘Stephanomics’ wasas usual behind the curve :

” This week’s statement by the Federal Reserve hasachieved all that Ben Bernanke might have hoped it would achieve; stocks areup, the dollar is down, and so are US bond yields. We can’t say for sure thatit will “work”, but all of these developments ought to be netpositive for the US economy….the US sees competitive depreciation as awin-win for them. If other countries, with flexible countries, don’t respondwith QE2 of their own, then their currencies will strengthen, and demand for USgoods in those economi! es will (theoretically) go up. If they do respond, withmore easing to counteract the rise in the currency, then global demand goes up,and the US is once again better off. Put that way, it sounds like a no-brainer’

What is missing is the BBC’s usual kneejerk jump to get a comment from JosephStiglitz, Nobel prize winning economist….and supporter of Labour’s and theBBC’s positon that ‘stimulus’ works, tax cuts don’t. This time Stiglitz wasopposed to the Fed’s printing money….saying Fed policies will not reduce longterm interest rates and produce loans for SME’s and are creating chaos inemerging markets…the money is going to emerging markets which don’t want themoney…because India and China are doing fine, but the influx of short termmoney creates a bubble and increases exchange rates, destabilising theireconomy…The US policy is having an adverse effect around the world.

So no gig for Stiglitz! If you run against their meme, you’re history