Speed Blogging: 1/2 hour on the economy

I haven't tried to write much about the American economy in recent months.  Perhaps it's because the economic news has a "Groundhog Day" quality to it.  We are told the recovery is well underway, as we fight back from the worst economic slump "since the Great Depression," only to be told a few days later that we're slumping back into a recession.  The stock market goes up a little, then falls back down, so that after accounting for inflation in the intervening years, the Dow Jones is actually considerably below its levels in the last years of the Clinton Administration.  Technological breakthroughs these days seem limited to electronic gadgets you can carry around in your hands so that you can "Like" your "Friends" and "Comment" on somebody's picture of their favorite cat.

The Federal Reserve pumps money into the system through its current iteration of Quantitative Easing whereby it is buying up mortgage-backed securities (MBS) in the secondary market, primarily from the Primary Dealer "community" (the "Friends" of the Federal Reserve which the Reservists "Like.")  This is called "money printing" by the goldbug, libertarian community, which in a sense it is, but it is the only kind of money printing the Federal Reserve allows itself.  Ben Bernanke does not want to produce "runaway" inflation such as would occur if the Fed purchased not MBS but actual mortgages from actual Americans.  This latter approach has been suggested by many as a real goose to the economy: the Federal Reserve could simply buy up all underwater mortgages in the United States by printing the money necessary to refinance them at a value equal to the house's fair market value, while leaving the owner-occupants in place.  Suddenly, a giant cohort of house-rich Real Americans would stand proud in their front yards.

Nope, can't do that.  Bernanke is certain (and I'm certain he's right) that an economy stage-managed to that degree by the Central Planners would turn the American economic tragedy into a farce of hyperinflation.  So The Bernank comes at the problem from oblique angles: holding down interest rates through Operation Twist (whereby the Federal Reserve buys up the long end of the Treasury curve), providing a secondary market for distressed MBS, and maintaining its Zero Interest Rates Forever program... forever, which starves the savers and retirees who might otherwise earn some money on their bank nest eggs, but this is an economy with many problems, and trying to fix some of those problems entails making others worse.

Thus, the salient point is at last reached: why do we have an economy where only tweaks and gimmicks are available for dealing with its many deficiencies in providing a general, prosperous standard of living for its citizens?  Why do we have the general feeling that no matter what scheme we try next, we're going to remain mired down in this sluggish, sputtering contraption known as the American economy, in a fugue state similar to the conditions which have prevailed since 2007, when the wheels began to come off?  When the Bubble popped?  Choose your mechanical metaphor.

Sorry, that's all the time we have for today.  Tune in next time when we ask some more rhetorical questions.