The implication is that QE has not been sufficient, if we were in a deflationary scenario. But we do seem to have avoided deflation for the most part.
There is a lot more to the economy that is out of the control of monetary policy. Companies and large organizations (Apple is a prime offender, hoarding $70B+) are sitting on a lot of cash. They are unwilling to invest it, spend it, or even to return it as dividends. Instead, they buy large amounts of treasury bonds* (which has pushed yields on them to unheard of lows).
The obvious solution to that, then, would be to use fiscal policy - to spend the money that is being dumped on the treasury at rates well below inflation. The treasury is paying negative interest, in real terms (and for a very brief period, in nominal terms!). If private entities won't spend it, the government should - provided they can step back, and reduce the debt when things get going well again.
Strangely enough, more deficit spending might be the solution to a problem caused by too much deficit spending to begin with.
One other caveat; there can be still more causes to unemployment that are not monetary in nature. Labor markets are notoriously inflexible.
*: I don't mean to imply that Apple literally holds treasury bonds (though they might). Apple might have its money in a bank, and the bank might deposit the money at the fed, or buy treasuries itself, but the net effect is the same; the money sits somewhere, unused, where the government could use it. In fact one suggested solution was to stop paying interest on federal reserve deposits, or even charge a negative interest rate on deposits above a certain threshold.
"The implication is that QE has not been sufficient, if we were in a deflationary scenario."
What would it take to prove to you that QE was a straight-up bad idea? Because you can always say it wasn't "big enough", that's a null defense. Adopting that as your first and best defense is cognitively dangerous, and sets off alarm bells in my head.
The goal of monetary policy is to manage inflation. Therefore, if there was hyperinflation, that would be a clear sign it was failing. It's hard to pick an exact number - but certainly inflation over 10% annualized would be a sign that it was not going well.
The CPI is the benchmark of the effectiveness of QE. I prefer the one without energy and food ("core"), myself, because the question I am concerned with is "What effect is the size of the money supply having on prices?" (Instead of, "how scarce has oil become?")
Bear in mind that high(er) inflation with very low nominal interest rates means you can have a 0 or negative real interest rate - which rather handily destroys debt, and encourages banks, companies, etc, to make riskier investments (because the money pile they sit on is steadily losing value).
Is combined fiscal + monetary policy working well? Of course not; there's a large output gap. The economy is not in good shape. I'm arguing that fiscal, not monetary, policy is to blame, along with the reluctance of large entities to deploy their money.
There is a lot more to the economy that is out of the control of monetary policy. Companies and large organizations (Apple is a prime offender, hoarding $70B+) are sitting on a lot of cash. They are unwilling to invest it, spend it, or even to return it as dividends. Instead, they buy large amounts of treasury bonds* (which has pushed yields on them to unheard of lows).
The obvious solution to that, then, would be to use fiscal policy - to spend the money that is being dumped on the treasury at rates well below inflation. The treasury is paying negative interest, in real terms (and for a very brief period, in nominal terms!). If private entities won't spend it, the government should - provided they can step back, and reduce the debt when things get going well again.
Strangely enough, more deficit spending might be the solution to a problem caused by too much deficit spending to begin with.
One other caveat; there can be still more causes to unemployment that are not monetary in nature. Labor markets are notoriously inflexible.
*: I don't mean to imply that Apple literally holds treasury bonds (though they might). Apple might have its money in a bank, and the bank might deposit the money at the fed, or buy treasuries itself, but the net effect is the same; the money sits somewhere, unused, where the government could use it. In fact one suggested solution was to stop paying interest on federal reserve deposits, or even charge a negative interest rate on deposits above a certain threshold.