Ignoring Monetary Stimulus as Economic Policy (Extra!)

Originally published at Extra!, the magazine for Fairness and Accuracy in Reporting

Extra! February 2012

Ignoring Monetary Stimulus as Economic Policy
U.S. media offer austerity as nonsensical solution

By Michael Corcoran

With the United States now years into a crippling economic downturn, and Europe facing a looming economic crisis, media have been covering the economy more than any other issue. The two most recent annual reports on U.S. media coverage from the Pew Center for Excellence in Journalism (2009–10) conclude that “the No. 1 story of the year was the weakened state of the U.S. economy.”

Despite this enormous amount of coverage, corporate media present only a narrow range of possible policy prescriptions for the economic crisis. While reducing entitlement spending and otherwise cutting the deficit tend to worsen economic downturns, they have been the policy solutions the mainstream media has amplified the most (Extra!, 6/10). Meanwhile, policies that are traditionally more effective for recovery are either disparaged—the treatment given to fiscal stimulus—or, when it comes to monetary stimulus, largely ignored.

This dynamic prompted Ari Berman of the Nation (10/19/11) to ask about this “central paradox in American politics over the past two years”:
How, in the midst of a massive unemployment crisis—when it’s painfully obvious that not enough jobs are being created and the public overwhelmingly wants policymakers to focus on creating them—did the deficit emerge as the most pressing issue in the country? And why, when the global evidence clearly indicates that austerity measures will raise unemployment and hinder, not accelerate, growth, do advocates of austerity retain such distinction today?

The answer, Berman argued, is that the media narrative has been dominated by an “austerity class” made up of Washington pundits, politicians and think tanks with a shared interest in redirecting government finances to the corporate private sector. From the point of view of these advocates for the 1 Percent, the most effective way to revive the economy—restoring lost demand by increasing the supply of money and putting it in the hands of the poor and middle-class people most likely to spend it—is also the worst way. And so, in the corporate media discussion, monetary stimulus remains safely off the table.

Read the rest here.