The Federal Reserve building. The Fed is the central banking system of the United States, created on Dec. 23, 1913. (AgnosticPreachersKid / CC BY-SA 3.0, via Wikimedia Commons)

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Getting out of debt is a big challenge for the United States. Avoiding another recession will take many more hours than a two-hour panel discussion, but the more time we spend analyzing the issues and hearing viewpoints from all sides will help us understand the issues. Understanding the problems will help us frame the problems in the right way, and framing the problems in the right way is the first step to finding solutions.

Thank you for joining us for this live blog. We will be doing more live blogs at Truthdig that focus on major issues in our country and world. Our next one is scheduled for Thursday at 6 a.m. PT, when we will look at how China and Russia have become more aligned over the past decade and what the emerging China-Russia axis means to geopolitics.

12:57 p.m. PST: Given the interconnectedness of the world, should countries coordinate responses? Or are there competitive advantages to not coordinate responses? Coordination is not the same as correlation, answers Clarida.

12:55 p.m. PST: Cost-benefit analysis on regulation would be good. More capital makes the system much more resilient.

12:53 p.m. PST: Large changes in health care policy and financial regulations collided with a recovery that was still finding its legs. Political timetable doesn’t work. Time will tell about whether the Affordable Care Act is a positive policy change.

12:51 p.m. PST: Would it be good to lower interest rates?

12:49 p.m. PST: What is the time and place for helicopter money? Wall Street Journal had an article today that quoted Richard Clarida.

12:46 p.m. PST: Interest rate isn’t just a number. It’s a correlation. Some say it’s different. Definition of all the variables has changed.

12:45 p.m. PST: In most states, reserves are still short of pre-recession levels, Pew reports.

12:41 p.m. PST: Time for audience questions. Are stabilizers bigger than suggested? What are the chances that 3 percent GDP deficit goes to double digits?

Wendy Edelberg: We have not been surprised by what has happened with automatic stabilizers. Taxable income has moved more than GDP growth, but that cannot be verified yet.

Jared Bernstein: Monetary policy is being challenged. Countries expect currency to go down and it goes up. Look at Japan.

12:40 p.m. PST: Getting the policy right is important. Every dollar burned on green pork doesn’t go to preschool teachers, Swagel says.

12: 38 p.m. PST: We have more fiscal space than we thought, says Wendy Edelberg.

12:37 p.m. PST: Japan is a prime example that more debt does not equal some sort of GDP tipping point, says Jon Faust.

12:35 p.m. PST: Earnings, health care, investment. Long-term unemployment is dangerous.

12:30 p.m. PST: There is nuance to forward guidance.

12:29 p.m. PST: Rainy day funds.

12:28 p.m. PST:

Do you want to be at 1 so you can go back to zero?

12:27 p.m. PST: Raising interest rates to a high level so you can cut them is not an effective approach.

12:24 p.m. PST: Are our politics ready for the next recession? There is a sense that fractiousness can lead to positive change. That said, political divisiveness makes fiscal relief difficult. The more we can get on the automatic side, the better.

12:21 p.m. PST: The consensus is that we need a mix of policy and monetary tools because the monetary tools are weak.

12:20 p.m. PST: Panel time. Louise Sheiner, policy director of the Hutchins Center on Fiscal and Monetary Policy, leads the discussion.

12:19 p.m. PST: David Wessel points out that Ben Bernanke last week wrote a blog post on negative interest rates being one of the tools the Fed has left.

12:18 p.m. PST: Bottom line is that the Fed is not out of ammunition. It still can provide meaningful support and should consider some of the “not tried yet” solutions. But there is a reason they have not been tried.

12:16 p.m. PST: Helicopter drops. Issue currency. Distribute to people. When is it opportune to do that? Central banks have mandates. Most could not do it. Feds need to check with lawyers first. Much of U.S. Fed legislation has clear intent of having Fed operate at market prices and avoid implicit or explicit subsidies.

12:15 p.m. PST: Faust: “Information-only forward guidance only adds accommodation at times when the public misunderstands Fed intentions.”

12:14 p.m. PST: Prescriptive forward guidance. Promise an inflationary boom in the future when interest rates are not zero. The idea: Anticipating future good times, businesses and households spend more today.

12:13 p.m. PST: Large scale asset purchases (LSAPs), or quantitative easing. There is still capacity, but not as much as there used to be.

12:11 p.m. PST: Faust: “Things the Fed has tried. Things the Fed has not tried. Things folks talk about are probably not legal.”

12:10 p.m. PST: Here are Faust’s slides.

12:07 p.m. PST: Jon Faust is up to discuss the Fed’s likely response to the next recession. Is the Fed aware of the risks? Yes. Is the Fed prepared to do what it can? Yes. Would the Fed’s response be powerful and effective? Only modestly so.

12:05 p.m. PST: What should the Fed do? Fed options include forward guidance, maturity extension, quantitative easing. Cap the yield on government bonds with substantial intervention.

12:04 p.m. PST: Clarida poses a question: “As output gaps close in some major economies, and as central banks aim to run economies ‘hot,’ is there an upside risk to inflation that is not factored in to the consensus view?”

12:02 p.m. PST: The Fed will have to turn to unconventional tools in the future, says Clarida, but those tools may not include negative interest rate policy (NIRP).

12:01 p.m. PST: Insurance can be valuable in an uncertain world.

12:00 p.m. PST:

The global view. What happens in Beijing and Brasilia is almost important as what happens in Washington, D.C., to U.S. bond yields, says Clarida.

11:58 a.m. PST: The “new neutral” interest rate requires a gradual liftoff to a lower destination.

11:55 a.m. PST: Quantitative easing (QE) programs have worked, says Clarida. It’s going to take time for the Fed’s balance sheet to normalize. The size of the balance is a lot larger now than in 2007 or 2008.

11:53 a.m. PST: Richard Clarida doesn’t think the next recession is imminent, but thinks it’s smart to talk and think about it now. He will now share his thoughts on monetary policy.

11:52 a.m PST: Wendy Edelberg talks about investor concerns: “Investors should care not just about levels, but about trajectories.”

11:51 a.m. PST: Do we want to tie Congress’ hands? How much do we trust Congress to do the right thing? Not so much right now, but that could change.

11:50 a.m. PST: Swagel looks forward to reading Spielberg’s paper in full.

11:49 a.m. PST: Triggers on and off are abstract, says Spielberg.

11:48 a.m. PST: Take out the political drama, and analyze what spending we should have.

11:45 a.m. PST: Swagel is not against all spending. He believes there is a role for spending, spending on preschool is good, spending on Social Security high earners, not so much. He brings up the North Carolina question: Was not extending unemployment insurance the right move?

11:43 a.m. PST: Quality of stimulus matters. Solyndra makes no sense, says Swagel.

11:42 a.m. PST::The fiscal presentations are over. Now, we have a panel Q&A.

11:41 a.m. PST: There is fiscal room. What works? Do more of the good. Do less of the bad. Have a growth agenda. Think about quality over quantity.

11:37 a.m. PST: Infastructure building should be a response to the next recession. Hard to have a discussion until we agree to not burn taxpayer resources. High-speed rail is a crazy train to nowhere, says Swagel.

11:34 a.m. PST: Don’t let a crisis go to waste. Swagel cites the Rahm Emanuel philosophy. Was Affordable Care Act good or bad? Layering on disruptive change (Dodd-Frank, regulatory surge, uncertainty about the rule of law, AIG, housing, energy) in a recession makes recovery difficult.

Swagel says it’s an open question about whether the recovery is weak.

11:33 a.m. PST: Phillip Swagel is up next. He will look at why the 2008 recovery was weak and considers a fiscal response. The slides of his presentation can be found here.

11:29 a.m. PST: Another way to strengthen our automatic stabilizers is to leverage and/or build architecture in other programs that have the infrastructure to ramp up. Spielberg recommends direct or subsidized job creation and proposes an employment fund.

11:27 a.m. PST: One way to strengthen our automatic stabilizers is Medicaid (FMAP).

11:21 a.m. PST: Ben Spielberg from the Center on Budget and Policy Priorities is up next. He wrote a paper with Jared Bernstein on preparing for the next recession. Are we ready for the next recession? The short answer is no, says Spielberg. The long answer motivated them to write the paper. The answer is still no, but we can be prepared. They recommend two ways we can get there: 1. strengthen automatic stabilizers and 2. look at architectures in other programs Congress is using, and leverage those countercyclical actions to increase stimulus.

Stabilizers expand when economy is weak and contract when the economy is on its way to recovery.

11:19 a.m. PST: Automatic stabilizers are budget neutral. But the policy underlying stabilizers may affect revenues and spending.

11:15 a.m. PST: Length of economic expansions vary. GDP and potential GDP through 2026 have a small average output gap. That gap has budgetary implications through automatic stabilizers — provisions in law that increase in revenues and decrease in outlays in the federal budget. Stabilizers are projected to add 1.5 percent to the deficit.

11:13 a.m. PST: High and rising levels of debt increase the likelihood of fiscal crisis, says Edelberg.

11:10 a.m. PST: Wendy Edelberg is up. She says CBO projects deficits will increase from 2.9 percent in 2016, up from 2.8, and to 4.9 percent in 2026. All of Edelbeg’s slides can be found here.

11:08 p.m. PST: Changes in real GDP from 1965 to 2015.

11:07 a.m. PST:

Interest rates are near zero in the United States and have been for a while. Can interest rates go below zero in the United States? Maybe. There are negative interest rates in other countries. Interest rates around the world are low. The point is we have reason to believe that interest rates may remain low. Will the Fed be stuck near zero for a long time? Can Congress do more? What would “more” be?

11:06 a.m. PST: Wessel’s slides can be found here.

11:03 a.m. PST: The last recession in the United State ended in 2009. What if we have another recession? Is Congress prepared regarding taxes and spending? Is the Fed equipped? Wessel runs down some fiscal facts.

11:02 a.m. PST David Wessel kicks off the event.

10:28 a.m. PTS: Economic inequality remains a major issue in the United States after the Great Recession of 2008. Some economists believe that inequality was a root cause of that financial crisis. Could closing the gap between the wealthy and poor help?

9:55 a.m. PST: Jared Bernstein and Ben Spielberg from the Center on Budget and Policy Priorities examined the impact of American Recovery and Reinvestment Act of 2009 and shared lessons learned in a nice paper.

9:37 a.m. PST: Is America headed for another recession? That question has been on the minds of many economists and financial analysts since the beginning of 2016. Nobody knows what the future holds, and the numbers are squiggly, according to Bloomberg Business.

Are the fears being overblown? Some people say yes and see signs that a recession is not coming.

The Brookings Institution is holding a panel discussion event in Washington, D.C., on Monday to examine these questions and the future of the U.S. economy.

Financial markets seem to be anxious that a U.S. recession is on the horizon even though economic forecasters disagree. When the next recession arrives, will fiscal and monetary policy be able to respond? If so, how? The Federal Reserve is holding short-term interest rates near zero and faces resistance, internally and externally, to reviving large-scale purchases of assets. The federal debt is larger, as a share of the economy, than at any time since the end of World War II and is projected to climb further.

The Hutchins Center on Fiscal and Monetary Policy will lead a panel discussion that looks at fiscal and monetary tools and which ones will and won’t be available during a recession. Senior Fellow and Hutchins Center Director David Wessel will moderate the discussion.

The talk will start with fiscal policy, focusing on Congress and the president. Wendy Edelberg (assistant director for economic analysis, Congessional Budget Office), Ben Spielberg (research associate, Center on Budget and Policy Priorities) and Phillip Swagel (professor, University of Maryland School of Public Policy) will discuss.

The next item on the agenda is monetary policy and the Federal Reserve. Ricard Clarida (professor of economic and international affairs, Columbia University) and Jon Faust (professor of economics, Johns Hopkins University) will discuss.

The event will close with a panel and audience Q&A.

We will be live-blogging the discussion. Join the conversation at #NextRecession.

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