Recently, the Federal Open Market Committee (FOMC), led by Federal Reserve Chairman Ben Bernanke and with an overwhelming vote of 11 to 1, decided to undertake another round of purchases of mortgage-backed securities, a process known as quantitative easing. That's the technical explanation for their actions. The practical explanation, the explanation that will matter to the 12.5 million Americans who are currently unemployed, is that the Fed decided that it needs to do more to reduce unemployment, and that it is going to use the tools at its disposal to help Americans to get back to work.
Almost immediately, conservatives decried the Fed's decision. Some have even suggested changing the Federal Reserve's mandate, saying it shouldn't focus on lowering unemployment at all -- a very dangerous proposition during our economic recovery. Others have said that the Federal Reserve should stand back, and wait for Congress to take action to stimulate the economy.
Unfortunately, I know all too well that this isn't a problem that Republicans in Congress are willing to fix right now. There's simply too much partisan gridlock in Washington to pass the types of effective fiscal policies that could also lower unemployment.
There are some things Congress can do to stop unemployment from going higher, including addressing the upcoming fiscal cliff. But when it comes to reducing unemployment, the same Republicans who are criticizing the Fed have also consistently blocked legislation, including President Obama's jobs agenda, which would have created new jobs, resulting in an America that is built to last. This type of political obstructionism is why the Federal Reserve, a nonpartisan body, was charged with maximizing employment. The current political situation is a clear demonstration of why the Fed's dual mandate is not only important but also essential.
Actions by the Federal Reserve can never offset the damage done by an obstructionist Congress that refuses to address the fiscal cliff in a balanced fashion, and simply will not work with the president to create jobs. But by engaging in this next round of quantitative easing, and by committing to further actions until the labor market improves substantially, the Fed anticipates that it can lower interest rates, help shore up the housing market, and improve business conditions for investment. The announcement that the Fed expects to maintain the Federal Funds rate to stay below a quarter of one percent until mid-2015 should also have a positive impact on the economy. In short, the Fed, under Chairman Bernanke's leadership, and with a near-unanimous vote of the FOMC, has taken Vice President Biden's advice: It's betting on the American people, not against them.
Follow Rep. Maxine Waters on Twitter: www.twitter.com/Maxinewaters
Eric Black: If You're Sick of Gridlock, Blame the Constitution
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This comment has not yet been postedBy this mechanism—and with the output of work battalions— government can operate entirely without taxes. The lifetime output of every human being is at its disposal. Workers are allowed a color TV, state-subsidized alcohol and recreational drugs, and violent sports to amuse them, but they have no other options. They cannot escape their class. Society is divided into the rulers and the ruled, with an administrative bureaucracy in between. Privilege is now largely a right of birth. The worker class and even most of the administrators serve masters whom they do not know by name. But serve they do. Their new lords are the monetary and political scientists who created and who now control The New World Order. All of mankind is in a condition of high-tech feudalism.
Banks are the big winners - now sitting on billions in their vaults. Business owners not hiring or planning on hiring in the next six months since they are jittery about what the election outcome will be and what new policies will be put in place.
Yeah - we need anothe "quantitative easing" - lower interest rates on savings, so who the heck will benefit from having their savings in a bank? Only the banks.
Evidence? Oh wait you have none. Just your unsubstantiated superstitious beliefs.
Answer: because they have tools that are sharper than moderately robust polling and second-guessing the will of the electorate.
And a mandate.
They don't even need a heart to do what they've done.
I see. Since it didn't work last time, or the time before that, it's SURE to work this time. What it DOES do is drive up asset prices, which benefits the rich. It drives up commodity prices, and drives down the value of the dollar, which hurts the poor. Someone has to explain to me how QE is helping the unemployed in reality, not just in theory.
The American public is being very skillfully played. We are being conditioned to tolerate this kind of economic performance from our government. Meanwhile, income inequality continues to grow.
Provide your counter factual. Whoops I doubt you understand what I just said. Go back to 3rd grade science where they teach about needing a "control group" when testing.
What a joke. This woman is a salesperson for the corporatist elite. The Fed, in the "quantitative easing" thing, is buying 40 billion dollars a month in junky mortgage bonds from Wall Street brokerage houses. What they're doing is printing money and giving it to Wall Street. It can't and won't "shore up the housing market"--interest rates are already as low as humanly possible. And it won't "improve business conditions for investment"--interest rates are already at zero for institutional investors and cash is EVERYWHERE. Handing Wall Street 40 billion a month isn't going to hire one person. Not ONE. This is the third time they've done it.
All QE does is keep rich people fat and happy. That's the only "economy" the Fed is worried about. And Ms. Maxine Waters is doing the rich's bidding by selling you this line of nonsense.
Makes sense? About as much as your argument.
In a monetary sovereignty, where the government has the authority to issue the currency (Constitution) there is no NEED to borrow money to support the actions of the Congress.
The government should issue the currency without debt and let the bankers should freely lend the money so-created.
The illogical scenario extant is the CAUSE for all the debt in the world, and no money.
What we NEED is money - without debt.
The solution is as old as the hills, as these researchers at the IMF have recently proven.
The Chicago Plan Revisited.
http://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf
Thanks.
Simple solutions never solve complex problems with some kind of bumper sticker mentality. Only RepubliBillys believe that stuff. Either quit voting NO on programs to get people back to work or start cutting defense spending and propping up puppet governments overseas so you can prosper from dollar labor. You've got to have skin in the game or you simply don't remain credible or make any sense.
Here's a really simple solution from the IMF.
The Chicago Plan Revisited.
http://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf
Restores Employment.
No inflation.
Ends boom-bust cycles.
Repays government debt.
Reduces private debt.
Just for starters.
Avoid it at your peril.
Thanks.
The question is this. Is the Fed doing this because of unemployment, or is the Fed getting away with this because of unemployment? And if the Fed is getting away with this because of unemployment, it's not a great stretch to start thinking the Fed might just be tolerating, or might even be engineering unemployment, so as to be able to do such inflationary giveaways to the rich and not risk inflation?
QE has little to no measurable impact on aggregate demand, which is what drives job creation in the economy where 70% is due to the consumer. This is even more so when interest rates are extremely low to begin with.
No one in the current Congress is willing to accept the reality, that the ONLY solution is to increase Public spending until the point that the private sector can once again sustain growth and create jobs.
Answer: QE, and helicopter Ben to the rescue. No other reason, he saved the economy.
But who brags about 8% unemployment, especially when the employment participation level for men is below 70%, the lowest recorded in 65 years?
The overriding reason for the jobs increase (lack of overall decrease) was the original stimulus passed after Obama took office.
QE has next to nothing to do with increasing or even maintaining aggregate demand in an economy.
The ONLY thing that adds jobs to an economy, US or otherwise is an INCREASE in SPENDING.
The FED has no material impact on that, by definition.
The status quo--high unemployment, stagnant wage growth--will be sustained by the government and the Fed for as long as they can get away with it, because for so long as inflation is kept in check, they can keep on funneling money to the rich.
I am not discounting what you have said, as it has been said before, many times. However, I am pointing out that it is completely devoid of an empirical basis.
And congress will do that when hell feezes over.