Welcome to the New Normal, Comrade

Some days it seems much easier to tell yourself that you’re the crazy, stupid one, and that everything isn’t as bad as it seems. Then you wouldn’t have to keep shouting from the rooftops while being ruthlessly ignored. But then the Washington Post publishes a report that sends you racing right back up the fire escapes:

The reason the economy has been underperforming, Warsh says, is that policymakers responded poorly to the financial crisis. They focused on short-term growth boosts and neglected what you might call basic economic infrastructure investments. They didn’t open big new markets for international trade in order to expand exports, and they didn’t streamline the tax code to promote investment.

Meanwhile, Warsh said, lawmakers added new regulations to the financial system that solidified an oligopoly at the top of the banking industry, one that has served to restrict the flow of credit to small businesses and entrepreneurs. The Fed’s easy-money policies, he adds, have padded corporate profits but haven’t “trickled down” — his words — to average Americans.

Slow growth is the consequence of those policies, Warsh says. He fears the consequence of prolonged slow growth is a drop in the economy’s potential to grow. Longtime unemployed workers have lost skills, making it harder for them to find work. Executives have lost confidence in the economy’s ability to expand and willingness to invest in it. “We’ve been in this period of the new malaise for so long that workers and companies have lowered their expectations for what the U.S. economy can do,” Warsh says.

“Lowered expectations” is a phrase we’ve heard a lot these last few years. It’s right up there now with “bad luck.”