Bernanke Stands Ready
Fed Chair Ben Bernanke just addressed the annual Kansas City Fed economic symposium in Jackson Hole, WY. After a detailed review of recent subpar U.S. economic performance, he discussed the pros and cons of more quantitative easing. Rarely have other Fed chairs offered such insight into their thinking, but, based upon his extensive study of the Depression, Mr. Bernanke strongly believes that Fed transparency is essential to reviving markets. So the Federal Open Market Committee stands ready to provide more quantitative easing at its September 21 meeting, if not before, if the economy continues to falter. We are fortunate to have Mr. Bernanke's leadership in this crisis.
Here are main takeaways.
"... as we return once again to Jackson Hole I think we would all agree that, for much of the world, the task of economic recovery and repair remains far from complete."
"... a return to strong and stable economic growth will require appropriate and effective responses from economic policymakers across a wide spectrum, as well as from leaders in the private sector. Central bankers alone cannot solve the world's economic problems. That said, monetary policy continues to play a prominent role in promoting the economic recovery and will be the focus of my remarks today."
"We will continue to monitor economic developments closely and to evaluate whether additional monetary easing would be beneficial. In particular, the Committee is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly. The issue at this stage is not whether we have the tools to help support economic activity and guard against disinflation. We do. As I will discuss next, the issue is instead whether, at any given juncture, the benefits of each tool, in terms of additional stimulus, outweigh the associated costs or risks of using the tool."
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I did my graduate monetary
I did my graduate monetary economics too many years ago for it to help me out here. So what tools does the Fed have left? I think it has been creating money like crazy and it has interest rates down to really low levels, virtually zero at the short end, now what?
Stands ready? To do
Stands ready?
To do something next month?
I'm not quite getting the hero worship here:
The issue at this stage is not whether we have the tools to help support economic activity and guard against disinflation. We do. As I will discuss next, the issue is instead whether, at any given juncture, the benefits of each tool, in terms of additional stimulus, outweigh the associated costs or risks of using the tool."
The associated risk of continued high unemployment ought to be a bit more pressing.
Thank goodness ....
This recession versus previous. [With growth revised downward since then.]
As the bow of the ship disappears beneath the waves, the captain promises to stand ready to man the pumps, should the need arise.