...what we actually got was action that was pretty obviously calculated to be the absolute least the Fed could do without generating headlines saying “Fed ignores weak economy”.
I’m sorry, but this looks like pure concession to political intimidation — a Fed refusing to do anything that would let Republicans accuse it of helping Obama.
If you were wondering what Ben Bernanke really meant but wouldn't actually say when he started us all using the phrase "fiscal cliff," wonder no more. As i explain in my column in today's Roll Call, it means "the 2013 deficit must be a lot higher. Enjoy.
What Bernanke Really Meant by ‘Fiscal Cliff’
Alan Greenspan would have been proud of the Ben Bernanke-coined “fiscal cliff.”
That’s exactly the kind of phrase Greenspan would have used when he was chairman of the Federal Reserve — an expression with no pre-existing meaning that makes immediate headlines but doesn’t say anything specific.
That was how Greenspan used to go on record without creating a political headache for himself or for the Fed because, once uttered, the phrase meant different things to different people.
The increasingly repeated assumption in the aftermath of this past Friday's jobs report seems to be that this is what was needed to push the Federal Reserve over the edge for another round of monetary policy-induced stimulus.
On the one hand, the thinking behind the assumption seems unassailable: With Congress unable or unwilling to use fiscal policy to give the economy a boost and businesses and consumers mostly continuing to stay on the sidelines, the Fed is the only game in town.
But, on the other hand, the Fed has been repeatedly warned by congressional Republicans over the past year not to stick to its economic knitting by focusing just on inflation and not to do anything to boost GDP. As I've posted before, having eliminated any chance that fiscal policy will be used as a tool to enhance the recovery and boost Barack Obama's reelection chances, the GOP is trying to make sure that the only other tool available to do that -- monetary policy -- also isn't available.
As I explain in my column from today's Roll Call, if you're not yet angry about The Cliff, you soon will be and what's taking you so long?
Coming to a Political Theater Near You: The Cliff
I only realized how angry I was about the cliff several days ago when I started to outline this week’s Fiscal Fitness. By the time I sat down to write it several days later, I was fit to be tied and needed to avoid anything that included caffeine.
You know what I mean by the “Fiscal Cliff” — Federal Reserve Chairman Ben Bernanke’s ultimate Fed-speak for the budget apocalypse that could occur between Dec. 31 and Jan. 2. That’s when a series of existing federal-budget-related policies will expire and others will be triggered that could result in an economic calamity.
The news channels are only getting part of the story right about Ben Bernanke's first press conference today.
This is not an attempt by the Fed to provide additional information to financial markets; the Fed already communicates with them on a regular basis. In fact, that's always been the Fed's primary target audience.
The press conference is the latest piece of a strategy the Fed has been using to broaden its audience by going beyond financial markets and over the head of members of Congress by speaking directly to voters. It's based on two perceived needs. First, Bernanke told his staff over a year ago that the Fed had no choice but to talk to Main Street on a regular basis because, if it didn't, it was going to have to explain it's actions at the worst possible time -- after a crisis occurred. Second, as I've written about on CG&G over the past year, the Fed has a political bullseye on its chest and has no choice but to build public support for what it does and how it