"Renaissance Thinking About the Issues of Our Day"
Chairman of the Federal Reserve Ben Bernanke announced a new round of monetary stimulus by the Fed to do something about persistently high unemployment. This new plan will pump $85 billion into the economy by purchasing mortgage-backed securities and trading short-term bonds for long-term bonds with the banks. Basically - that means pumping more money into the economy. The Fed also took a rather bold step today in saying this new stimulus program is open-ended - and that the Fed will continue these measures if unemployment doesn't start falling faster. Now - there are legitimate criticisms against what the Fed is doing - primarily that it won't have the sort of stimulative affect on the economy that's needed since banks still won't lend to small businesses. But really - there's nothing else the Fed can do. Remember - the Fed was created with a dual mandate. One, to keep inflation under control. And two, to keep unemployment low. And since Republicans in Congress refuse to do anything to address high unemployment in America - blocking stimulus after stimulus - then the Fed is the only institution left that can at least make a dent in the jobless number. And that's what it's trying to do. And it's very telling that Republicans are criticizing the Feds efforts today - since as we all know by now - their banking on a bad economy to win big in November.