The question that is never asked is where does the Fed get the $1.7 trillion that is “pumped” into the economy.
There is a reason no one, not even congress, can see the Fed’s accounting records. They are printing most if not all of that $1.7 trillion. At some point, that will crash the dollar, clearing the way for a world currency.
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Bernanke says recovery softer, Fed to act if needed
JACKSON HOLE, Wyoming (Reuters) – U.S. Federal Reserve Chairman Ben Bernanke said on Friday the economic recovery has weakened more than expected and the Fed is ready to take further steps if needed to spur slowing growth.
Bernanke’s comments, in an address to an annual conference of global central bankers held by the Fed, came as the government reported that economic growth in the second quarter was weaker than it had originally estimated.
With interest rates held at ultra-low levels since December 2008, the Federal Open Market Committee, the Fed’s policy-setting body, has turned to other measures, pumping more close to $1.7 trillion into the economy.
“The committee is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly,” Bernanke told the Fed conference, held in Jackson Hole, Wyoming.
He made clear, however, that the U.S. central bank has not decided what would prompt additional easing.
“At this juncture, the committee has not agreed on specific criteria or triggers for further action,” he said.
Bernanke said the U.S. central bank’s purchases of longer-term securities have been effective in lowering borrowing costs and that he believes the benefits of buying more such assets, if needed, would outweigh any disadvantages.
U.S. stocks turned lower initially after Bernanke’s comments but then recovered to trade about 1 percent higher, while U.S. Treasury bond prices were lower, as was the U.S. dollar.
OTHER OPTIONS
Bernanke also said other options to spur economic growth — such as committing to hold interest rates exceptionally low for an even longer period than is currently priced in to financial markets, or raising the Fed’s inflation targets — would be less effective in the current environment.
He stressed that the high jobless rate remains a concern to policy makers, and said the Fed would be vigilant against deflation — a dangerous downward spiral in prices that chills economic growth by making both businesses and consumers reluctant to make purchases– even though it is not currently a risk in the United States.
“Because a further significant weakening in the economic outlook would likely be associated with further disinflation, in the current environment there is little or no potential conflict between the goals of supporting growth and employment and of maintaining price stability,” he said.
Investors and economists said Bernanke’s remarks indicated that he favored more quantitative easing measures.
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Link to full original article: Bernanke says recovery softer, Fed to act if needed
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