Making the Switch From Monetary to Fiscal Policy

The video discusses the current economic situation, emphasizing the need for the Federal Reserve to adjust its policies even if the economy falters. It highlights that monetary policy is not the solution at this point, and fiscal policy should be prioritized. The discussion also touches on the Fed's credibility issues, inflation rates, and the importance of maintaining well-anchored inflationary expectations. The risks of an overly accommodative monetary policy, such as misallocating credit, are also addressed, with fiscal policy being suggested as a better tool.

What credibility issues might the Fed face if the economy falters?

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Explain the difference between monetary policy and fiscal policy in the context of the current economic situation.

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