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Monetary easing, again?

July 26, 2012

These days the financial news is dominated by talk about what the Fed will or will not do. More specifically, Wall Street wants to know if the Federal Reserve will do some form of further monetary easing, such as quantitative easing or operation twist. Isn’t it ironic that one day our Fed officials and the administration are espousing how well their plan is working and that a recovery is in full swing and the next day they are so concerned with the economy that they are sending the financial markets the signals they want to hear — that more money printing is on the way. “Don’t leave the party yet, “they say, “the bar is open and drinks are on the house.”

Can anyone count how many times they have said our recovery was underway? How many times have they told us that their monetary policies are the reason for the recovery? How can they continue to justify more easing, more debt, and more destruction of the dollar? I have seen some skillful tightrope walking in my career, but our monetarists are using the rope to tighten it around the taxpayers’ neck!

Here is what a Fed board member or Secretary of the Treasury might say if they were honest: “It looks like our monetary policy has not worked. In fact, we have made our financial crisis much worse — sorry about that. Our bad! Boy, we won’t do that again!” I know it is sad, but a statement like that would actually give me hope.

Fed Sees Action if Growth Doesn’t Pick Up Soon

Federal Reserve officials, impatient with the economy’s sluggish growth and high unemployment, are moving closer to taking new steps to spur activity and hiring.

Since their June policy meeting, officials have made clear—in interviews, speeches and testimony to Congress—that they find the current state of the economy unacceptable. Many officials appear increasingly inclined to move unless they see evidence soon that activity is picking up on its own.

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3 Comments
  1. John permalink
    July 26, 2012 10:43 am

    I couldnt agree more! I don’t understand what the fed is thinking. What they ought to do is back off. It appears every move they make has less of an impact as before. This should raise the question of whether the fed should be attempting to manipulate the economy when we really aren’t in a severe recession. Don’t get me wrong, we are nearing a recession, but we are not in a depression.

  2. trt permalink
    July 26, 2012 12:56 pm

    Jon,

    Right on the money, as usual. It is becoming increasingly difficult to stand by and watch this slow -motion train wreck.

    • Jon permalink
      July 26, 2012 2:36 pm

      You are in the same place I am! Jon

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