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Three months ago, the Federal Reserve stepped up with a meaningful economic intervention plan, which was effectively the third round of quantitative easing. Just as important, Fed Chairman Ben Bernanke made an "open-ended" commitment, suggesting efforts will simply continue indefinitely until the economy is in a healthier position.
Most assumed that Bernanke would simply reiterate his support for that policy in his quarterly report this afternoon. Instead, the Fed is actually going much further.
The Federal Reserve is keeping its foot hard on the economy's accelerator amid persistent high unemployment that may be sapping the confidence of consumers and businesses.
The nation's central bank announced Thursday that it would purchase longer-term Treasury securities to the tune of $45 billion per month to maintain a drive to help accelerate the sluggish economy and boost employment.
It also, for the first time, set a specific target for how long interest rates would remain at historic lows near zero percent: as long as the unemployment rate, now at around 7.9 percent, remains above 6.5 percent.
Matt Yglesias called the move "huge," adding that the FOMC "has stopped screwing around and started doing real expectations-based monetary easing."
Keep in mind, there have traditionally been two approaches Washington can take to boost the economy: fiscal measures (government investment) and monetary policy (Fed intervention). Democrats have traditionally preferred the former, Republicans the latter. However, as the Republican Party became radicalized, GOP officials began to oppose both.
I mention this because over the last two years, Bernanke has repeatedly implored Congress -- pleaded with lawmakers, really -- to do something to improve job creation and economic growth, though in each instance, Republicans have ignored his pleas. Indeed, GOP leaders have not only blown off calls for fiscal stimulus, they've in turn pressed the Fed to stop trying to make the economy better.
That means it's up to the Fed -- and only the Fed -- to give the economy a boost. Fortunately, as of today, Bernanke is approaching the task with new ambition and enthusiasm.
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What is and what ought to be?
That is the question the Republican brand keeps screwing around with as they hold the rest of hostage trying to make everything their own way, and that seems to be their only way of doing business!
Thank goodness the Fed is beginning to act! -Kevo
Beginning to act? This is just more of the same. The only thing the Fed can actually do is print money and either give it to the big banks or Treasury.
Pooper can't even throw a basketball right. Another big miss, basketball boy. You'd probably do better if you didn't have your head up your assets.
This is going to set right wing radio on fire. They literally don't want America to prosper, no pun intended. Ben B is no dummy, the right will block all stimulus attempts.
It won't be long till this forum hears from its Hemorrhoid on this.
Didn't take long. See below.
LOL But nonetheless, he does deserves credit for word economy this one time...
Hemorrhoid didn't used to understand that inflation wouldn't happen until the economy recovered. Instead just kept predicting (hyper)inflation. Learning? I doubt it. At heart, libertarians can't really change.
Great news! I have the feeling that he waited till Obama won so it wouldn't look like he was helping re-elect him.
I'll bet a donut you are correct.
On the twelfth day of Christmas my true love gave to me
A new round of quantitative easing.
if folks say this is good news, then it's good news.
good news but 4 years late. Bernanke should have known all this long ago but he sloooooooooooow walked it.
This along with many CEO`s now saying yes on tax increases. we are almost seeing that just maybe there only a few rich/crop that's controlling teapublican puppet strings.
as their backing is fading quickly.
Repugnants USED TO like Fed intervention. Now they say I've got mine, and you're S.O.L.
You have to understand that this is just about all they've got left. What they are doing is trying to discourage the parking of capital by people/businesses who have it. rates are already negative adjusted for inflation.
Sounds really great for the investment banks to continue useing cheap money to make leveraged bets on sure deals that will let them own the world..
Spot on.
Luz...this doesn't do that.
What it does is it makes it less profitable to put money in the safety of bonds...and hopefully gets businesses and people to put the money to work.
The nation's central bank announced Thursday that it would purchase longer-term Treasury securities to the tune of $45 billion per month.
Forgive me if I am mistaken, but does this mean that we are going to borrow $45 billion per month? Doesn't sound like a fix to me.
Not borrow, print.
So there you have it, instant money. No just because food and fuel prices are rising, pay them no mind. It's all to a good cause... making business more profitable.
It's called stimulus annie oakley, it's what you guys do when you are in power and are not pandering to even stupider people.
I am in the more astute category. I salute you fellow Macro-addict.
Thanks once again for demonstrating what the term "ignorant wingnut" means, little pascokid.
Republicans appear to be hell-bent on destroying any shred of respect they may have ever had. Maybe if they drive themselves over the edge, we won't have to put up with them anymore.
Really Dodge?
LMAO
Treasury Secretary Timothy Geithner this afternoon said the Obama administration is "absolutely" prepared to go off the looming "fiscal cliff" if Republicans do not agree to raise tax rates on the wealthy.
Appearing on CNBC, Geithner was asked if the administration is willing to accept the impending spending cuts and tax increases if Republicans refuse to raise rates on the top two percent of income-earners as President Obama is demanding.
"Oh, absolutely," Geithner replied. "There's no prospect for an agreement that doesn't involve those rates going up on the top two percent of the wealthiest."
Led by Sen. Patty Murray, D-Wash., Democrats have pushed the idea that the cliff is not as bad as the hype, with it being more of a “slope” than a “cliff.”
Sen. Charles Schumer backs Murray,
Oh boy and how did we get to the edge of the cliff, why the GOP drove us there with their stupidity and childish temper tantrum after McCain lost the white house for them.
As a follower of this subject I must add that several people have begged for the FED to be more aggressive...as far back as 4 years ago...with policies that they are now finally implementing. Some people (cough PAUL KRUGMAN) it seems know what they were talking about and it wasn't hindsight....it was real time!!
"cough PAUL KRUGMAN"
he has been correct on what he speaks.
Treasury Sec.
and what he writes...actually his writing is better than his speaking....because when he says things a lot of times they don't make sense to the regular person...see Mary Matalin this past weekend on This Week.
not quite getting your comment though...Treasury Sec?
Please, NO!!!
Krugman is right where he belongs. He would be wasted as SecTreas, and besides he's not an administrator.
As for the reason why he came up in the first place, remember what Brad DeLong had to say about Krugman.
Matt Miller wrote a brillant column in the Wash Post suggesting that the White House inform the American public that the $5.6B increase in the National Debt is needed to cover the 5.6B increase from the PAUL RYAN budget that ever Republican voted for, or put the illness with the right party, the GOP!
that doesn't work because the president didn't sign that into law.
But the $5.6E12 was just fine with the Republicans, wasn't it?
So what's the problem now?
The President Obama runs around the country insisting that the rich that already pay their own fair share should pay more!!
Bringing the tax rates back to the Clinton rates will run the federal government about 8 1/2 days and will equal about 80 Billion per year awhile at the same time during the 4 years of the Obama administration is running yearly deficits of over 1.2 TRILLION
The Democrats and Liberals are so removed from reality!!!!
Research shows that from 1950 to 1980 income games hit every income level... 1982 to preset the income games went disproportionate to the rich while productivity is up...so the working stiff bakes more pizzas and gets a smaller and smaller number of slices. If you don't think the rich should pay more taxes then explain your solution for increase wages for the 98%?
GOP opposes increasing the minimum wage, raising taxes, the whole safety net, unemployment insurance....everything but defense spending.
and you mean the rich that pay their fair share like Mitt Romney? dude made 20 million in 2011 and his tax rate is twice what mine is and i have a family of 5 and live check to check...something is wrong with that... if you don't think there is then something is seriously wrong with you. Maybe I am lazy? maybe I am a moocher? Obama is gonna give me stuff any day now right?
From 1982 to the present the rich took every handout that came their way, what is even funnier is in another post he will be whining that GE paid no taxes which proves his talking point about the rich paying their share out of the water, yet he can't connect the dots between corporate profits and the rich incomes not being taxed. Guess home schooling didn't inform him that profits are what makes businessmen their income unless he was told that was double taxation which leaves one to ponder if a corporation pays 0 in taxes how that turns into double taxation. Oh yeah just throw in Reagan fuzzy math 101 and it makes perfect sense to the incredibly brain damaged.
QE 3 or 4 or however many they do is nothing more than printing money backed by nothing.Not backed by gold nor a healthy economic indicators nor consumer confidence.It will inevitably lead to hyper inflation and a possible economic collapse.One day democrats will act like republicans,that's right, it will be them slashing budgets.Greece is a prime example of this.Then the axe men will be fleeing for their lives as hoards of coffee sipping entitlement mentality people react like those from the French Revolution.This time it will be the fault of the mobs not some sun king and his royal heirs.That's right the budget will have to be balanced some day someway.Spending by a massive corrupt government has been and is the problem.No one from any station of economic status should have to part with 60% and upwards of income to appease the leviathan.This my friends is tyranny.The middle class won't be exempt either, we too will shoulder draconian taxes and get little from it.This new hybrid three headed beast of crony capitalism is everything Obama promised he wouldn't do, lobbyist, gaming tax codes to punish or reward, regulating people to death, racial healing, post war,(with troops still in the middle east) by the way.All bold faced lies.The promise to uphold the constitution, a lie.So go ahead print while America decays you damned fools !!
Right who can forget GWB and his "it's only a god damned piece of paper" moment in constitution history. Or was it uncle Dick who said it, I always had a hard time figuring out what the puppet said and what the puppet master said during the GWB years, you know the years from 2001 to 2009 that you righties seem to forget even though the constitution took a beating during those years, which also escaped you righties who are now claiming how much you adore the document, well the parts you like while ignoring those you don't like after the first 10 amendments.
I dont understand,when the subject of raising taxes on the rich....oh wait its not really raising them,its taking away tax credits.Thats like saying when wal-mart has something on sale and the sale ends that they are raising the price.Its actually just going back to the regular price or when it comes to the taxes,its what the tax rates where before the special tax breaks.(in other words their sale will end) Anyways,when ending the tax breaks on the high income its said that the money saved will only run the gov. for what?8 days,like its such a little amount why bother.Well why fight it so much if its not much moneymfor one and how can the right say that one minute and defend Romneys claim that Obama won the election giving "gifts" to the freeloading 47 %.So cutting tax breaks on millionairs will be pennies but cutting the giving poor families $42 dollars a month in food stamps will balance the books.It makes me sick that they defended the notion that making it easier for the people to pay back their loans for higher education,so they can better themselves thus making their country a better place,some how was just a trick for their vote and it hurt the country in the process.How could no one on their side see how ridiculous it was to try to dig up an old program that give cell phones to the poor and say that was the Pres. buying poor peoples votes.Anyone with a tv would have seen the ads promoting this program for many years.But they actually believe this was for the election.I think these people must share the space under Patric Stars rock.So food stamp,that I would challange anyone to try to eat healthy on,free cell phone that had nothing to do with Obama,and an easier repay plan on educational loans are extravagant gifts that stole an election. But millions in 'FAIR" tax money is drops in the bucket that isnt enough to run the GOVernment for much more than a week,but is worth going over a cliff for and distroying a country.....What am I missing??
They need to get the banks out of the political arena, stat. If you work in a bank or for one you should not have any ties with the Federal Government, that is extremely risky and dangerous, get them off the boards. Ignore their lobbyist.