Hence, I see the following as the key policy question: Is the United States, as a society, willing to forgo the leisure, home production, and/or near-term consumption required to generate materially higher future economic activity? I don’t see this question as one that I can answer using my tools as an economist.
This suggests that crucial elements of the monetary policy transmission mechanism continue to work. The Eurosystem's balance sheet shrunk to 15% of GDP in May 2009 from its peak of 19% of GDP in December 2008. This appears to be the result of increasing money market activity, at least at short maturities, and a sign of improving confidence.