Thursday, July 08, 2010

Where are the Tea Partiers on this?

WaPo: (emp add)
Federal Reserve weighs steps to offset slowdown in economic recovery

Federal Reserve officials, increasingly concerned over signs the economic recovery is faltering, are considering new steps to bolster growth. ...

Fed leaders are weighing modest steps that could offer more support for economic activity at a time when their target for short-term interest rates is already near zero. ...

One pro-growth strategy would be to strengthen language in Fed policy statements that the central bank's interest rate target is likely to remain "exceptionally low" for an "extended period." The policymakers could change that wording to effectively commit to keeping rates near zero for even longer than investors now expect, perhaps adding specifics about which economic conditions would lead them to raise rates. Such a move would be opposed by many members of the Fed policymaking committee who are wary of the "extended period" language, arguing that it limits their flexibility.

Another possibility would be to cut the interest rate paid to banks for extra money they keep on reserve at the Fed from 0.25 percent to zero. That would give banks slightly more incentive to lend money to customers rather than park it at the Fed, although it also could cause technical problems in the functioning of certain credit markets.

A third modest possibility would be to buy enough new mortgage securities to replace those on the Fed balance sheet that are paid off as people take advantage of low interest rates to refinance.

None of those steps amounts to the kind of massive unconventional effort to drive down mortgage rates and prop up growth that the Fed took in late 2008 and early 2009, when the economy was in a deep dive. Then, the Fed began buying Treasury bonds, mortgage securities and other long-term assets -- more than $1.7 trillion worth by the time the purchases concluded in March. ...

Fed officials do not rule out launching a major new asset-purchase program. Rather, they say they would consider one only if their basic forecast -- of continued steady expansion in the economy -- proves to be wrong.
Like it or not, this is market manipulation, and using a hell of a lot of money to do so. If you add it all up, it's three times what Obama has asked for with the stimulus (even more if you only count the spending part of the stimulus).

So where are the protests against Bernanke? From the Tea Partiers, and from Republicans? There are a few Ron Paul types that want to abolish the Fed, but for the most part the polemics are directed against the Democrats and not this powerful federal financial institution.

On a lighter note, this from the comment thread for that WaPo report:
Here's my plan - the Fed sends those "massive infusions of cash" to ME. In return, I promise to stimulate the economy. My ideas include gold chains, furs and jewelry to women friends, fast cars and old whiskey. I promise to keep spending until the economy improves or I collapse.

The advantages of this plan should be obvious - the money goes into the economy, not held on bank balance sheets or gambled on Wall Street; I would not insist on a multi-billion dollar bonus - the sight of a renewed America is reward enough for me; and the state I live in (California) would have an easier time with its' annual budget if it receives taxes paid on my purchases and my increased state income tax. Finally, I promise not to take advantage of any tax loopholes - I'll spend all the billions in the good ol' USA - maybe take a trip to the Gulf States, I hear they could use a few more tourists.


Here's my plan - the Fed sends those "massive infusions of cash" to ME. In return, I promise to stimulate the economy.

That's called a tax credit.

By Anonymous Anonymous, at 7/08/2010 8:49 PM  

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