I am getting a significant amount of pushback against the Fed actions today, on the ground that they only help financial markets and not real people, and that the Fed is up to its old 2008 tricks.

I get the frustration, but I don't agree with the conclusion. Here is why. /1

First, the Fed’s objective is to preserve employment, not to bail out investors or reckless corporate types. Of course, the two are connected, but we should be a lot more agitated if the Fed disregarded its employment mandate to teach a lesson to leveraged businesses. /2

Second, the Fed is not doing this on its own — it’s doing it together with the Administration and Congress, which set money aside for the Fed to lever up. This is coordinated monetary and fiscal policy. It’s very different from what the Fed did in 2008, when it went it alone. /3

Third, there was ample bipartisan consensus in Congress to approve these type of Fed actions. Pretty much everyone approved this policies. /4

Finally, after the crisis is over there should be a serious discussion about a mechanism whereby beneficiaries of Fed support pay for it. Threats that the Fed won't offer support in the next crisis are just not credible because of the high cost involved (see 2008 and today). /end