This is a Fed full of Obama appointees pursuing a disastrous policy trajectory that's creating all kinds of problems for Obama. But I've never read any repoting indicating that the Obama economic team is upset about monetary policy, I've never heard any discontent with monetary policy from administration officials on or off the recod, and Obama's allies on Capitol Hill have basically never called publicly or privately for more expansionary monetary policy. Rather than someting as simple as an error, there seems to be a totally comprehensive systematic blunder in which Democrats simply ignore the most powerful tool for bolstering aggregate demand while Republicans call for a disastrous tight money agenda.Yup.
I do have a slightly different interpretation of the Fed's actions than Yglesias does...I guess where he tends to emphasize how little they've done, I would tend to put a little more stress on how they've at least avoided rushing to tighten any time there's mild good news about the economy. And so I'd overall talk more about a weak or suboptimal policy, rather than a disastrous one. But, you know, his interpretation has a lot going for it, too.
And yup -- it's bizarre. This isn't fiscal policy, where there's Congressional obstacles to action and where Keynesian deficits were are counterintuitive for a whole lot of people. If Barack Obama had appointed a Fed Board full of wild-eyed irresponsible inflation-mad economic expanders, the truth is that no one would have noticed. Except for the effects, that is. I mean, Ron Paul would be very upset, but not noticeably more upset than he is already; the same, pretty much, for the Always 1979 crowd. Now, of course, if Fed policies actually produced serious inflation, you would get some real complaints about that, but presumably it would have accompanied a lot less unhappiness about economic growth and jobs, and that's a trade-off Obama should want. Unless he and the administration generally believes that different monetary policy really wouldn't help...but there's really no sign of that, either.
As Yglesias says, the attitude seems to be one of indifference -- they're neither happy nor upset about it. Which just doesn't make any sense to me, but of course things don't always have to make sense. I sure would like to hear more about it, though.
And: great catch!