, Columnist
The Fed Should Stop Being Such a Drag
The central bank needs to fight unemployment more aggressively.
An A for effort isn’t good enough.
Photograph: Getty Images
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With U.S. unemployment at levels not seen since the Great Depression, economic policymakers should be plotting a path to a better place. The Federal Reserve can’t generate a fast recovery on its own, but it can and should prevent an unnecessarily slow one.
How can the Fed avoid being a drag? With one important caveat that I’ll discuss below, officials must do whatever it takes to bring down unemployment. At a minimum, this means the central bank should hold short-term and long-term interest rates at zero –- what traders call a “flat yield curve.”