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There were at least tepid hopes that Federal Reserve Chairman Ben Bernanke would announce significant steps to improve the domestic economy today, but he choice otherwise. Republicans are relieved, but they appear to be the only ones.
As was the case two weeks ago, when he not-so-subtly urged Congress to approve fiscal stimulus, Bernanke once again said he would "welcome economic support" from Capitol Hill. That, of course, is no longer an option -- congressional Republicans make no secret of their refusal to act.
But the Fed chairman still isn't willing to step up in a big way, either. Bernanke announced "a modest increase in its efforts to reduce borrowing costs for businesses and consumers by extending its existing 'Operation Twist' asset-purchase program through the end of the year," but chose not to take significant action to accelerate growth or lower unemployment, despite the fragility of the recovery, the slowing job market, and the crisis in Europe.
Repeating a line we've heard before, Bernanke said, "We are prepared to do what is necessary. We are prepared to provide support for the economy." He's just not "prepared" to do anything of any significance right now -- we're in trouble, but not enough trouble to stop the Fed from sitting on its hands.
Jonathan Bernstein argues this is today's most significant political story -- he's right -- adding that there's also "a real divide between the parties on how the Fed should be responding to the weak recovery."
It's true that Barack Obama has not made monetary policy a priority, and has (at least publicly) declined to put any pressure on the Fed to act. But Mitt Romney wants the Fed to go in the other direction entirely: He opposes any further efforts by the Fed to help the economy. He has gone at least half-Paulite and seems far more concerned about (phantom) inflation fears than he does about economic growth.
Indeed, on Sunday, in a little-noticed part of his Face the Nation interview, Romney bashed "politicians" who "want to do everything they can just before an election to try and temporarily boost something" when they should be concerned about "the potential threat down the road of inflation." ... What we have here is Romney also benefiting from a presumption that he cares about economic growth, when in that interview he's explicitly expressing far more concern about inflation.
To believe the Fed should be focusing more inflation, which barely exists, and less on economic growth is to be completely detached from reality.
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They are gutting us, and you hope they will stop butchering us?
I wish I could be this naive.
Bernanke sounds like a man who is mostly interested in keeping his job in the event that Romney wins in November...
Bernanke cannot be removed from the board.
He was appointed by Bush and will be on the fed board until 2020 no mater who is elected.
Obama should have removed Bernanke.
Would someone here like to give me the rationale behind giving the banks more money, which somehow increases employment?
We tried to explain things to you before but, noone can seem to convince you otherwise. The banks don't need our money. Bush gave the money to all the banks to help them out but, the hard working Middle Class of this great Country of ours had to pay for it. Stay with me here. President Obama is trying to clean up the mess that was left for him by the Bush Administration. Bush never took the time to regulate the stimulus that was given to the banks. He did this real fast right before leaving The White House. Let's paint the White House Black.
All the Fed can do is give banks money. That's it, that's all. So how is that supposed to affect unemployment? Sounds like Benen has an 'underpants gnome' problem.
Money printed/minted by the US government enters circulation through loans that go to banks through the federal reserve.
The Federal Reserve sets the interest rate for various federal loan programs. They are a private company that manages the money supply.
The fed doesn't actually determine how much money banks borrow or how much money is printed/minted.
I understand. The question is... how does that help unemployment? This recession isn't "demand" centered (contrary to popular opinion) but rather debt based. Everybody wants as much as always, they just won't pay for it. They can't. The instinct to hoard cash and pay down debt in times of trouble is overwhelming.
Like the elsewhere, the market place/business/economy operates within the boundaries of "fear and greed". Giving money to the banks does absolutely nothing for we the people or to alleviate fear of the future.
Bernanke knows that he is not going to get any help from the Congress either, when it comes to the economy.The Republicans are going to stick with their original plan of ousting the President and trying to make him look bad.The only other plan they've come up with is to stage a fake Watergate. They must not be too intellegient if they've thrown away their promising careers as Government officials to become gophers for the rich and famous. Bernanke will have to devise another way in which to help The American People through this depression minus the help from the GOP once again. What a bunch of lazy whooses.
Or a Rape-Public-CON, but I repeat yourself...
;-)
Well, the accepted explanation is that the Fed is trying not to appear to help Obama out. So what we're getting is the Fed succumbing to Republican pressure to implement Rmoney-tary policy. Yep, by trying not to appear pro-Obama, the Fed is forsaking its stated mission and is therefore, helping to carry out Republican economic policy to make the state of the economy as bad as they possibly can for November.
So this is Rmoney-tary policy. Not monetary policy. And of course, maybe .01% of the population realizes it.
If anybody thought Bernanke was going to do something, my apologies. This is who the guy is, another Wall Street schill who wants Romney elected. That said President Obama should be using the bully pulpit to hammer Bernanke and to my dissapointment he won't! please check out my progressive blogposts at www.ericnewsdaily.blogspot.com
I may be mistaken but, wasn't Bernanke hired by President Obama?
He's a holdover from Bush's time.
The Fed moves like a glacier - or one of those Tree People in the Lord of the Rings movies.
I think some folks are just afraid to make things worse, so don't do anything, some folks predict rampant inflation. Some claim deflation, some want to keep economy from getting any better, so do nothing to help jobs. But razor sharp focus on debt reduction, but hell no we can't raise taxes NOW… blah blah blah….
We need more jobs and Republicans want to cut jobs. Obviously they aren't going to do anything but throw mud at President Obama via whatever they can sell to public as hurting him.
Just do not understand why anyone would think Romney would be creating jobs, when he excelled at making money through cutting existing jobs. Assuming Congress would do something if he were to win? If Congress remains Republican controlled WHY would anyone think they would suddenly be helping working people get jobs? They have done the work that led to the worst economic recession/depression since FDR.
Limpy was telling the truth, admitting they hate the New Deal and "in the process of doing something about that".
Not scare tactics… it's what they want, to end Social Security and Medicare.
I like how they say No more Taxes, but then they keep raising the property taxes on the middle class. Our property is worth nothing. and why are we paying taxes on something we own. My land is your land, your land is my land from California to the New York Islands, this land was made for you and me. So much for freedom.
The Feds can't do anything about your property taxes. Write your local councilman and whine to him/her.
Sandy - Republicans want more Private sector jobs which has the double effect of taking off an unemployed worker off of unemployment and turns him into a tax payer. Republicans want to cut government workers because that reduces our ever increasing government spending. Dems want more government workers and spending and Repubs want smaller government and less government workers. Its as simple as that and thats what our choice is. However until the advent of the Tea Party, Republicans politicians were no better at reducing government spending than Dems because they are, wait for it, POLITICIANS!!!
Steve - The Fed has a dual mandate from Congress: 1. Keep inflation low and 2. Seek full employment. Uncle Ben has kept interest rates at zero since he began lowering rates in Q4 2008 and has said that he will keep rates at zero until 2014. He has done QE1, QE2 and Operation Twist. He can not lower interest rates below 0%. What more do you want him to do?
Exactly.
The problem is consumer demand - not money supply. Prices did not go up this year because there is no inflation, but the Fed is almost irrelevant for the economy right now.
Unemployment is determined by consumer demand.
Consumer demand is determined by income and population.
Income is determined mostly by education.
Our population is determined by immigration because the birth barely keeps up with the death rate.
We don't have enough consumer demand.
The solution is immigration and education - thing that the G.O.P. opposes.
I can see where inflation would hurt rich folks more than it would poor. We bailed the banks out with 2 trillion, and I hear the big biz has been sitting on another 2 trillion cash,,, waiting? or is it now invested/speculating?
One of my politically right/liar friends told me the price of everything has gone up 30% since Obama took office. I said that's certainly not true of real estate. He said everything but real estate,,, I said, my beer has gone down is price.. He said everything but real estate and my beer.. I said I don't think new car prices are up,,,,
Slave labor in China, Mexico, and India means we will always have high unemployment in the U.S.
But isn't that what we collectively want anyways? Machines and robots doing all the droll work and 90% are "free" to putter around in our gardens?
We are suppose to live in a state of emergency. Something bad is going to happen. The smart thing to do is change the army's mission to civil service, hire anyone who wants to join, and prepare for the upcoming disasters. In all emergency situations governments PRINT MONEY to get things done and control inflation by making war/emergency profiteering illegal.
Decentralize industry (shoes are strategic).
Encourage the small farmers.
Socialize higher education, energy, infrastructure, health, market liquidity, recycling, wetland rehab,,,.
Blow money/expand the economy building a 1G space station (man cannot survive for long anywhere in our solar system except for Venus). A fun, motivating activity the whole world can get behind (stopping an asteroid/comet from hitting the Earth).
Seems like a lot of disasters include a lot of sulpheric acid in the enviroment. What can we do,, besides protect our ground waters?
Rich folks can spend all the money they want to on themselves (decorating their many bathrooms) but they can't speculate. Create jobs, sure, but, I just don't see how the next big "Womba" idea will put any significant numbers of people to work. There will always be a dole, and it should be a nice one. People are happiest having between 120 and 150 friends and enough money to go out and play billiards or dance 3 or 4 times a week.
Remember the retort to the question, "Why do you rob banks?" It was, "Because that is where the money is!" Well, while watching TRMS; I saw the wealth graphs, and heard Rachel's conversation with Chris Hayes. For me it was like experiencing a financial epiphany.
The financial paradigm as we all know it has changed completely. It has made the current business models as taught at the best business schools antiquated, and without immediate redress through changes in the laws of the G20, the current business models will become extinct along with the remnants of the middle class.
Purchasing power is no longer the domain of the middle class. It belongs to the 1%. Citizens United has given us all a reality shock for sure, but it is also the precursor of our economic future. Politicians cater and bough to the wealthy because of the money. This has happened even though the voter, substitute middle class, has one vote each. The individual vote is technically something still sought, but no longer revered by our politicians.
Economically, the middle class no longer possesses anything cherished by the wealthy or the elite institutions as the vast amount of money has already been transferred away form them. The economic reality is truly frightening!
In this new economic world; Sony, Toshiba, HP, Dell, Nokia, or any other company relying on purchases from the middle class are the new mom and pop shops.. replacing the nostalgic five and dime stores of the late 1940s and 1950s. They will still earn money from the forever shrinking purchasing power of the masses, but it will not be part of the new paradigm that has been created for making enormous wealth. Wal-Mart isn't likely to build many superstores in Sri- Lanka.
Our government, and all economically advanced governments keep pleading the case for their shrinking middle class. From a business perspective, banks and the wealthy no longer view the middle class as part of their wealth equation. They are, for now, a nuisance that must be dealt with superficially.
Big banks realize to make big money they have to play in the markets that control that money. For them the middle class is the waitress coming around to the gambling tables to serve the drinks.