I have to say it is with some relish that I have been watching the FED and other CBs attempt to grapple with the macroeconomic straight-jacket that neoliberalism built. It is fun watching the rather lackluster attempts at coordination. And there is some more joy to be had in the realisation that having either gutted or in their failure to create the institutional capacity for real macroeconomic coordination that the CBs are pushing on an inflation (bubble ) laden closed straw.
It is not easy to find a metaphor let alone a well specified macroeconomic model to capture the present conjuncture but let me try.
Imagine you have a straw with elastic walls which is filled with water, sealed on the two ends and there is an air bubble protruding in one section. Now try to work the bubble out of the straw without puncturing the straw or letting any water escape. good luck.
No workers to blame this time around, no welfare queens, no burdensome social legislation, no government crowding out –just the markets.