Forget the Presidential elections. Forget the congressional elections. The most powerful institution in this country is neither the Office of the President, nor the Congress nor the Supreme Court – it is the Federal Reserve Board and a band of unelected economists who live in and breathe in a la la land. The Congress can get bogged down with endless debates about spending a million dollars on Public Radio. It might be an enormous effort for the president to get a few millions for discretionary spending. As far as the Federal Reserve system is concerned – there are no limits to what they can do. They are not bound by the electoral politics or repercussions of their stupidity. Bernanke just announced QE3. From NBC:
By NBC News staff and wire reportsThe bond buying will continue until employment improves.
That’s the message the Federal Reserve gave Thursday when it announced it will take new steps to boost the sluggish recovery including buying an additional $40 billion of mortgage debt every month for the foreseeable future.
“If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability,” the Fed said in a statement.
As if to punctuate its concern about the unemployment rate, which policymakers said “remains elevated,” the Fed also asserted it would extend its current monetary policy by keeping interest rates at historic lows until at least mid-2015 from late-2014 previously.
“The employment situation remains a grave concern,” Fed Chairman Ben Bernanke said at an afternoon news conference to explain the central bank’s decisions.
The Fed said fresh MBS purchases, which it will start on Friday, would come on top of its so-called Operation Twist program, in which it is selling short-term bonds to buy longer-term Treasury debt.
“These actions, which together will increase the committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and to help make broader financial conditions more accommodative,” it said.
Print. Print. Print. Punish the Savers. Reward the speculators on Wall Street who continually raid your pension funds. This $40b/mo bond buying QE3 program is the most irresponsible act yet by the Fed. This also has a political motive written all over it, which is to hand Obama the election victory in November. Quid-pro-quot for appointing Ben for the second term.
Two famous quotes come to my mind – one real and one fictional.
To paraphrase the infamous former Alabama Governor, “QE Today QE Tomorrow. QE Forever!”
To justify the levity in the announcement, I would add: just as Buzz Lightyear said in Toy Story, “QE. To Infinity and Beyond.”
While I agree with your comments, your stand is somewhat strikingly similar to that or republicans who are also opposing this. But Of course they don’t have any other suggestions to spur the economy. Here is an op-ed piece from Paul Krugman on NY Times on this.
http://www.nytimes.com/2012/09/17/opinion/krugman-hating-on-ben-bernanke.html
Paul Krugman has no credibility. I have explained my thesis several times – the best fix is no fix at all. Let the chips fall where they may. The excesses of malinvestmetn and easy money policy have to be corrected. You cannot continue to penalize savers for this long a period. All this does is keep making banksters richer.
What solutions are you tallking about. The fact that QE3 is needed it telling you the QE1, QE2 and QE-LTE didn’t work. What makes you think that this will work.
Did you ever see them admit their prior failures? Eight unelected officials at the Fed take control and experiment their voodoo economic theories on all of us.
Okay, Krugman claims the first QE were never big enough to arrest doing subsequent ones. It is like not administering all the antibiotics prescribed for a malady, so it will never be cured. He wants go for a big kill. But then I am no economy expert in any sense so I will have to weigh in all opinions including yours.
Yep, no one is admitting their past sins. For all the wonderful speech given by Bill Clinton for DNC convention, he never admitted he was the perpetrator. I am all for your argument, but who has the political will to do that? Obama had his chance at the beginning of his term to take the drastic measure but I guess he was scared stiff that any shock treatment would have collapsed wall street and he would have been blamed for that!
Thanks
Ramana