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Ben S. Bernanke - What the Fed did and why: supporting the recovery and sustaining price stability
Keywords:
Bernanke's defense of the action of the Fed's monetary policy making committee, on November 3, 2010, (with a vote of 10-1) to buy an additional $600 billion of Treasury securities over the next 8 months. His defense focusses on the prospects of deflation- how low inflation can morph into deflation (falling prices and wages), that can create a long period of economic stagnation. In addition, with low and falling inflation, Bernanke sees spare capacity in the US that can be utilized to reduce the number of jobless people. He points to the rise in stock prices and fall in long term interest rates in anticipation of the Fed's action, as evidence that this Fed move would improve financial conditions. Lower mortgage rates would make housing more affordable, higher stock prices would increase consumer wealth, confidence and spending. Spending would lead to higher incomes and profits for economic expansion, from this viewpoint. The situation in November 2010, was a deepening housing slump anticipated for 2011, gridlock after the 2010 midterm elections and no agreement on additional stimulus for 2011, the need to rebalance the global economy lacking cooperation from China (with China increasing imports and reducing exports and the US increasing exports and reducing imports). Fed's Bernanke does not mention these factors, and only hints at the gridlock towards the end of the statement. This Fed action will push the dollar lower, just as efforts to improve exports and the trade balance are underway. The Fed's committee sees the risks of commodities inflation as an acceptable risk in the current situation, and the use of a cautious approach assessing the purchase program regularly as sufficient measure of safety. As to difficulties of the unwinding of these policies, the Fed sees present danger outweighing the risks of no action. For emerging markets such as Turkey, India, Australia and other countries seeing even more inflows of capital, the risks are left to these countries to manage. The central banks of India and Australia moved to increase interest rates at the same time that the Fed made its move.
The U.S. Federal Reserve and QE II.
08/12/2010
Problems with another round of quantitative easing, with Fed bond buying efforts to generate a jobs recovery.
Grouped Articles
How QE 2 Could Drift Off Course
Wall Street Journal 08/12/2010
Wall Street Journal 10/18/2010
Wall Street Journal 10/25/2010
Wall Street Journal 10/26/2010
America's economy: Not by monetary policy alone
Economist 10/28/2010
Opinions Are Split on Fed Policy Move
Wall Street Journal 11/01/2010
Liquidity Trap in Japan and the U.S.
03/17/2008
With the demand curve for money horizontal further increases in the money supply do little to lower interest rates, or as in the current situation where the interest rates in the US are virtually at zero so that further increases in the money supply do little to stimulate the economy. As unemployment is growing and the financial sector weak, Bernanke and the Fed see other ways in which quantitative easing helps a recovery. Here Chritopher Woods compares today's situation in America to that of postbubble Japan. He says America is already in a liquidity trap. And the regulatory forbearance to cleanup the banking mess is similiar to that in postbubble Japan when it took the government years to get up the will and strength to straighten out the mess including breaking up the banks that are too big to fail.
Grouped Articles
Is the U.S. Economy Turning Japanese?
Wall Street Journal 10/27/2009
Economist 10/15/2009
Economist 12/30/2009
Fed’s Bullard Raises Policy Concerns
Wall Street Journal 07/29/2010
Opinions Are Split on Fed Policy Move
Wall Street Journal 11/01/2010
Ben S. Bernanke - What the Fed did and why: supporting the recovery and sustaining price stability
Washington Post 11/04/2010
Quantitative easing in the U.K.
10/17/2009
Grouped Articles
Trying to Put the Easy-Money Genie Back in the Bottle
Wall Street Journal 10/17/2009
Fed’s Bullard Raises Policy Concerns
Wall Street Journal 07/29/2010
Ben S. Bernanke - What the Fed did and why: supporting the recovery and sustaining price stability
Washington Post 11/04/2010
Errors made- US and Japanese economy comparisons for a lost decade.
02/13/2009
Japan's economy suffered badly after a flood of credit and bad loans, resulting in deflation and a lost decade. The comparison with what the US faces now.
Grouped Articles
Japan Is a Model Not a Cautionary Tale
New York Times 06/09/2013
Japanese Prices Rise, Signaling Rebound
Wall Street Journal 07/26/2013
In Japan’s Stagnant Decade, Cautionary Tales for America
New York Times 02/13/2009
In Japan’s Stagnant Decade, Cautionary Tales for America
New York Times 02/13/2009
New York Times 10/30/2014
Abe: U.S., Japan Close to TPP Trade Deal
Wall Street Journal 04/21/2015
A delicate balancing act for the Federal Reserve to withdraw support that puts a dark cloud over the economy..
10/01/2009
Incrementally withdrawing support where and when possible will be a tough act for the Fed, after the Fed has committed $1 trillion so far as support to debt securtization markets that breathe life into the USA economy. Shiller says these markets are dead, we are stuck, and no one knows what will happen if they are hobbled for corporate real estate, mortgages, auto loans.
Grouped Articles
Wall Street Journal 08/01/2013
Fed Must Consider the World and All U.S. Employment
Wall Street Journal 04/09/2015
How the Fed Can Avoid the Next Bubble
Wall Street Journal 10/06/2009
Paralysis in the Debt Markets Is Deepening the Credit Drought
New York Times 10/07/2009
New Order: No Money, No Problem
Wall Street Journal 10/07/2009
Fed Frets About Commercial Real Estate
Wall Street Journal 10/07/2009
Comparisons of the U.S. Economy with Japan, considering the Federal Reserve's easy money policy and little lending by banks.
10/15/2009
Is the US economy already in a liquidity trap with exploding monetary growth and little consumer lending asks Christopher Wood. Views of other experts on the subject.
Grouped Articles
Target Is 'Flexible,' Says Japan Bank Chief
Wall Street Journal 04/12/2013
Japan Is a Model Not a Cautionary Tale
New York Times 06/09/2013
Sluggish Economic Recovery Proves Resilient
Wall Street Journal 04/21/2014
Is the U.S. Economy Turning Japanese?
Wall Street Journal 10/27/2009
Economist 10/15/2009
Wall Street Journal 12/08/2009
Low interest rates and Fed policy in 2010-2012
10/02/2010
Grouped Articles
New York Times 10/16/2014
Enough With the Low Interest Rates!
Wall Street Journal 10/02/2010
Wall Street Journal 10/25/2010
Wall Street Journal 10/26/2010
Opinions Are Split on Fed Policy Move
Wall Street Journal 11/01/2010
Ben S. Bernanke - What the Fed did and why: supporting the recovery and sustaining price stability
Washington Post 11/04/2010
The risks of the Federal Reserve's reinflation policy in 2010-2014
10/11/2010
A rise in commodities prices is one serious risk, leaving consumers drowning in the reinflation.
Grouped Articles
Inflation Below Fed Target for 22nd Month in a Row
Wall Street Journal 03/29/2014
Risk of Deflation Feeds Global Fears
Wall Street Journal 10/16/2014
Fed Must Consider the World and All U.S. Employment
Wall Street Journal 04/09/2015
Fed's Reflation Bet Could Hit Consumers Before It Helps
Wall Street Journal 10/11/2010
Wall Street Journal 10/25/2010
Wall Street Journal 10/26/2010
A Federal Reserve sponsored bull market in the U.S.
09/24/2009
With quantitative easing (QE), the Fed creating money to buy Treasury bonds at a fast pace, and with inflation "exceptionally low" in the Fed's words, there is considerable liquidity to support the surge in stocks. But this could change quickly. Investors would benefit from caution.
Grouped Articles
Wall Street Journal 05/08/2013
Wall Street Journal 05/11/2013
Stockmarkets: Don’t worry, be happy
Economist 05/27/2013
Wall Street Journal 05/29/2013
Wall Street Journal 11/17/2013
An About-Face for the Stock Market’s 5-Year Return
New York Times 02/15/2014
The Federal Reserve's Quantitative Easing (QE II) in the US in 2010-2011
08/12/2010
Grouped Articles
How QE 2 Could Drift Off Course
Wall Street Journal 08/12/2010
QE2 No Smooth Ride For Bondholders
Wall Street Journal 11/02/2010
Ben S. Bernanke - What the Fed did and why: supporting the recovery and sustaining price stability
Washington Post 11/04/2010
Wall Street Journal 11/04/2010
Wall Street Journal 11/04/2010
Overheard: Pension Pain From the Fed
Wall Street Journal 11/03/2010
Deflation threat in the U.S. in 2010.
05/27/2010
Negligible growth in incomes and the lowest increase in the consumer price index since 1962, with the eurozone crisis overhang, pose threat of deflation.
Grouped Articles
Risk of Deflation Feeds Global Fears
Wall Street Journal 10/16/2014
The Recovery: Why Deflation Remains a Threat
BusinessWeek 05/27/2010
Real Disposable Income: Bad News for Democrats?
BusinessWeek 06/03/2010
New York Times 07/11/2010
Economists React: How Big a Threat Is Deflation?
Wall Street Journal 07/16/2010
Fed’s Bullard Raises Policy Concerns
Wall Street Journal 07/29/2010
Japan and deflation after the global economic crisis of 2009.
04/13/2009
Grouped Articles
Tokyo's Move to Raise Tax Hits Snag
Wall Street Journal 12/27/2011
Japanese Prices Rise, Signaling Rebound
Wall Street Journal 07/26/2013
Japan Says 'Sayonara' to Deflation Worries
Wall Street Journal 12/26/2013
Japan Official Cites Fundamentals in Yen's Drop
Wall Street Journal 04/12/2013
Falling Prices in Japan Feed Deflation Fears
New York Times 04/13/2009
Japan Braces for Protracted Stretch of Deflation
Wall Street Journal 05/01/2009
Allan Meltzer's action plan for the economy includes reversing the excessive monetary easing starting now in October 2009 so that it can be done gradually and not hurt the economy through sudden contraction later on.
10/01/2009
Allan Melzer was co-founder an co-chairman of the Shadow Open Market Committee for over two decades, advisor to Presidents Kennedy and Reagan, and one of the foremost experts on the Federal Reserve System. He calls for the U.S. Federal Reserve to adopt an early exit strategy from loose monetary policies.
Grouped Articles
Once Again, the Fed Shies Away From the Exit Door
Wall Street Journal 07/11/2013
Bhidé and Phelps: Central Banking Needs Rethinking
Wall Street Journal 07/16/2013
Preventing the Next Financial Crisis
Wall Street Journal 10/23/2009
Is the U.S. Economy Turning Japanese?
Wall Street Journal 10/27/2009
Economist 10/15/2009
Jobs Now, Deficit Reduction Later
BusinessWeek 10/29/2009
Criticism of Bernanke's role at the Federal Reserve
01/02/2009
The difficult renomination and the subsequent 70-30 vote with 30 Senators opposed including Boxer, Feingold, Sanders and others. This follows Ron Paul's criticisms in Congress of the Fed's role- see that link group.
Grouped Articles
Martin Feldstein: The Federal Reserve's Policy Dead End
Wall Street Journal 05/09/2013
Bhidé and Phelps: Central Banking Needs Rethinking
Wall Street Journal 07/16/2013
Fed Chairmanâs Departure Casts a New Light on the Bush Legacy
New York Times 07/26/2013
Wanted: A Boring Leader for the Fed
New York Times 08/20/2013
Wall Street Journal 09/15/2013
What's Needed in the Next Fed Chief
New York Times 09/15/2013
U.S. Federal Reserve's policy and actions in 2010-2013
08/27/2010
Grouped Articles
Fed Officials Try to Set the Market at Ease
Wall Street Journal 06/24/2013
Bernanke Plays Down Link Between Jobless Rate, Fed Moves
Wall Street Journal 07/18/2013
In Surprise, Fed Decides to Maintain Pace of Stimulus
New York Times 09/18/2013
Economists See Nominee as Slightly More Dovish Bernanke
Wall Street Journal 10/10/2013
Yellenâs Path From Liberal Theorist to Fed Voice for Jobs
New York Times 10/09/2013
The Yellen Fed? Precise and Predictable
New York Times 10/09/2013
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