AP Photo/Ted S. Warren
Federal Reserve Chairman Ben Bernanke, left, and Stanley Fischer, right, Governor of the Bank of Israel, talk together outside the Jackson Hole Economic Symposium on Friday.
When Chairman of the Federal Reserve Ben Bernanke spoke on Friday in Jackson Hole, Wyoming, it seemed he had given up all hope of Congress listening to the warning he made in July.
At that time, Bernanke said U.S. economic policies were on an unsustainable path and the "recovery could be endangered by the confluence of tax increases and spending reductions that will take effect early next year if no legislative action is taken."
Since Congress has yet to pass a budget and prevent compulsory cuts from going into effect at the beginning of 2013, which Bernanke warned could lead to 1.25 million fewer jobs being created that year, the Chairman sighed, made no mention of Congress, and acknowledged the Fed can do more. But what exactly, he left to be desired.
In his defense of unconventional monetary policies, Bernanke hinted that the Fed may employ a third round of quantitative easing (QE). That would mean a third round of bond purchases intended to fight unemployment by encouraging more borrowing and spending as well as even lower long-term interest rates.
Caroline Baum of Bloomberg View has a prediction:
That means another kick in the pants is likely. While Bernanke said the "hurdle" for non-traditional policies may be high, the bar for additional action seems to be set quite low. The minutes from the Fed's July 31-Aug. 1 meeting state that additional steps "would likely be warranted pretty soon" absent a "substantial and sustainable" improvement in the economy.
What might that mean for the election?
There are only two more meetings before the November election: Sept. 12-13 and Oct. 23-24. The Fed would probably prefer to stay out of the headlines in late October, which means September would be the most logical time to announce something beyond the existing maturity-extension program.
The big question is, if (or when) the historically unpopular Congress again fails to pass a budget, how much more can Bernanke and the Fed do? How much will they do?
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you mean the Ryan do nothing, owned by Grover Norquist GOP Party of "NO" that congress,the ones who walked on bols/Simpson. RYAN who thew Obamas jobs Act in the garbage, 4 times, while trying to kill the ACA 23 times AND ABORTION 123 TIMES..THAT CONGRESS
HE IS RIGHT THEY WILL NOT GIVE HIM THE TIME OF DAY TO HELP THE COUNTRY,STATE,LOCAL AND YES FEDERAL CUZ GROVER SAYS NO..JUST LIKE ROMNEY WOULD. AS HE PLEDGED HIS ALLEGIANCE TO GROVER NORQUIST, A LOBBYIST,NOT YOU, NOT THE PEOPLE WHO BOUGHT HIM, BUT A LOBBYIST.THAT CONGRESS??? YUP HE IS RIGHT..
I'm just trying to imagine how making more money available to banks and other finacial institutions will fix the economy. Demand is low, and the banks are making giant profits. They seem to be giving medicine to a healthy patient in order to cure their neighbor. What I do see happening is the devaluation of the dollar to stabilize prices, something Bernanke admitted to being a partial motivator. All in all it looks like investor protection at the cost of the working class as long term inflation looks grave and consumers are no more able to afford he products on the shelf than they were last year. Which one knowingly took a risk, the investor, or the 40 hour a week worker? Is this contrast not valid, or is the media intentionally ignoring the decisions made that effect everyone differently in order to pretend we don't have a class problem in this country. Ignoring it won't make it go away and the decisions made by he fed ARE NOT with he interest of he working class in mind. The Fed is stabilizing prices and waiting for demand to catch up. As highly educated people, you know very well that protecting investors is not going to increase hiring or demand. What it is doing is preventing a recovery by keeping prices artificially inflated which prevents increases in demand which prevents increases in hiring. I'm not as many assume, looking for the gold standard. What I am looking for is a debate and perspective that includes more than the investor class.
More money needs to be made available to small businesses through the SBA and local banks and it needs to be assessable to struggling businesses at good terms and minimal paper work. Many once viable businesses have struggled through the recession and survived but that's about it. They're now carrying debt and can't get credit for debt consolidation, inventory or infrastructure without creating a huge business plan and filling out 17 pages of analysis which in the end only proves they need the money they're asking for. Banks can borrow at zero interest right now. I think they can take a little risk within communities to loan money to small businesses. The federal government gave trillion to banks that were insolvent and all they had to do was sign a one page document and they didn't even have to report what they did with the money or say so upfront. the stinginess of banks towards small and microbusinesses is appalling. We didn't cause the crash. why are we being frozen out of the credit markets?