Tuesday, September 20, 2011

The Fed Is Political

. Tuesday, September 20, 2011

Another entry in a continuing series. The top four Republican congressional leaders -- McConnell, Boehner, Kyl, Cantor -- sent this open letter to Bernanke and the Board of Governors. Highlights:

It is our understanding that the Board Members of the Federal Reserve will meet later this week to consider additional monetary stimulus proposals. We write to express our reservations about any such measures. Respectfully, we submit that the board should resist further extraordinary intervention in the U.S. economy, particularly without a clear articulation of the goals of such a policy, direction for success, ample data proving a case for economic action and quantifiable benefits to the American people. ... 
We have serious concerns that further intervention by the Federal Reserve could exacerbate current problems or further harm the U.S. economy. Such steps may erode the already weakened U.S. dollar or promote more borrowing by overleveraged consumers. To date, we have seen no evidence that further monetary stimulus will create jobs or provide a sustainable path towards economic recovery.
Bold added. Of course the very things they worry about happening if the Fed pursues further easing are exactly the things that would boost growth: a depreciating dollar (which would boost exports) and increased consumer borrowing (which would increase domestic demand).


The Fed Is Political
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