If fiscal policy was similar to the way it was during previous downturns we'd be at 6 percent unemployment if the Fed performed the same actions. The private sector deleveraged, badly scared after the financial crisis. State governments were like 50 little Hoovers. Then came 2011 and the sequester and government shutdown. Bernanke threw a bone to the hawks in June with his taper talk and that slowed the momentum of the economy as well. Japan is using activist monetary policy to good effect and hopefully continues. There is no danger of another bubble anytime soon. If the House goes Democratic, things could turn around somewhat. If the Democrats win in 2016, likewise. Commenter bakho: "Our big hope going forward is that the ACA will unchain employees (shackled to their jobs by health care benefits) to strike out on their own, wrest control from the one percent and revive the economy. Hopefully the availability of affordable health care will give more power to labor and bid up wages."
DeLong is right. Blinder and Gorton are good on the crisis. Bernanke referenced Gorton in Congressional testimony. We know what to do. Bernanke and other central banks flooded the financial system with liquidity preventing another banking crisis. The U.S., Germany, China, etc. all did fiscal stimulus programs to help the central banks with the turn around. They all retrenched too quickly because of politics.