Economists Frown on Fed Strategy
Posted on Apr 24, 2011
Economists across a broad range are frowning on the Federal Reserve’s most recent attempt to spur the economy, saying that the strategy of buying federal debt has helped the stock market but has had little positive effect on the general population. —JCL
The New York Times:
The Federal Reserve’s experimental effort to spur a recovery by purchasing vast quantities of federal debt has pumped up the stock market, reduced the cost of American exports and allowed companies to borrow money at lower interest rates.
But most Americans are not feeling the difference, in part because those benefits have been surprisingly small. The latest estimates from economists, in fact, suggest that the pace of recovery from the global financial crisis has flagged since November, when the Fed started buying $600 billion in Treasury securities to push private dollars into investments that create jobs.
As the Fed’s policy-making board prepares to meet Tuesday and Wednesday—after which the Fed chairman, Ben S. Bernanke, will hold a news conference for the first time to explain its decisions to the public—a broad range of economists say that the disappointing results show the limits of the central bank’s ability to lift the nation from its economic malaise.
AP / J. Scott Applewhite
Fed Chairman Ben Bernanke: He’s got some explaining to do.