Ben Bernanke Speech

August 26, 2011 by USA Post 

Ben Bernanke SpeechBen Bernanke Speech, not expect the Fed chief, Ben Bernanke, to announce more monetary stimulus and was not disappointed today … I mean, I do, but … you know what I mean. (The stock market was expecting more and collapsed in the news, but it is up again.)
We could use more help from the Fed’s Ben offered, although I’m probably less convinced than others of my kind that another round of relaxation of printing money to buy long term bonds would have helped a lot. Interest rates are already low and companies are sitting on cash reserves Phat. What is missing is a greater demand, and I take your point about fiscal policy.

What I expected to hear, and has a bit was the adoption of more fiscal stimulus in the form of specific work programs. Here is the Big Ben:

Normally, monetary or fiscal policies aimed at promoting a faster pace of economic recovery in the short term are not expected to significantly affect long-term performance of the economy. However, current circumstances may be an exception to this view, the standard exception to which I referred earlier. Our economy is suffering today from an extraordinarily high level of long-term unemployment, with almost half of the unemployed have been out of work for more than six months. Under these circumstances, policies that promote a stronger recovery in the short term can provide long-term goals as well. In the short term, putting people to work reduces the difficulties caused by economic hard times and helps ensure that our economy is producing at their full potential instead of fallow productive resources. In the longer term, minimizing the duration of unemployment is compatible with a healthy economy, avoiding some of the loss of skills and loss of attachment to the labor force that is often associated with long-term unemployment.

Boom!-So strong support from a strong short-term work plan that you will get a head of the Fed This should inspire the President’s team hit pretty hard in the discourse of jobs in September.

One final point. Although I am not sure that more relief from the Fed would be helpful at this point, I think if the underlying demand was stronger, that could help a lot. In other words, fiscal and monetary stimulus are good partners, but there is a sequence: first the needs, to raise the tax on the demand side of the economy, then it could help alleviate amplify the impact of that demand.

Unfortunately, if the Fed is reluctant to ease now, would be even more if some growth actually appeared on the scene.

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