Bernake Contemplates QE III Calls It "Prudent Planning"

[Mad Scientist]

Proof that an Ivy League education and a $5,000 suit doesn't make you smart:
Fed weighing further easing, Bernanke says The Fed - MarketWatch

Federal Reserve Chairman Ben Bernanke says the central bank is examining several untested (?) means to stimulate growth if (?) conditions deteriorate, even though the central bank believes the temporary shocks holding down economic activity will pass. (BS Alert!)
“The possibility remains that the recent weakness may prove more persistent than expected and that deflationary risks might reemerge, implying additional policy support.” (That means printing more money)
But there are a “range of uncertainties” (Last week he said he was "clueless") about the strength of the recovery and the Fed must engage in “prudent planning” to explore ways for stimulating demand, he said.

Well there is one thing Bernanke has done for me: My Gold and Silver investments are up!

Here's my "prudent plan" for the economy:

1. Impeach Obama.
2. Audit and/or End the Fed.
3. Renegotiate and/or end NAFTA and GATT.
4. Slap Tariffs on all imports.

 

[8537]

3. Renegotiate and/or end NAFTA and GATT.
4. Slap Tariffs on all imports.

That would help the Republicans get their wish, but you could crash the economy a bit faster if you just refuse to raise the debt ceiling.

PS: GATT ended 18 years ago. Please make a note of it.

 

[Wiseacre]

From your link:

Bernanke discussed three approaches to further easing in his prepared remarks.

One option, Bernanke said, would be for the Fed to provide more “explicit guidance” to the pledge that rates will stay low for “an extended period.”

Another approach would be another round of asset purchases, or quantitative easing, or for the Fed to “increase the average maturity of our holdings.”

Finally, the Fed could also reduce the quarter percentage point rate of interest that it pays to banks on their reserves, “thereby putting downward pressure on short-term rates more generally.”


I don't see any of these things making much difference, banks have already got plenty of money but aren't lending much of it out. The truth is that the business climate in this country is not good, thanks mainly to Obama's policies. No need to go through the list of issues that are depressing economic grpwth, it boils down to near non-exiastent growth as long as Obama is in the WH and the dems control the Senate.

 

[8537]

From your link:

Bernanke discussed three approaches to further easing in his prepared remarks.

One option, Bernanke said, would be for the Fed to provide more “explicit guidance” to the pledge that rates will stay low for “an extended period.”

Another approach would be another round of asset purchases, or quantitative easing, or for the Fed to “increase the average maturity of our holdings.”

Finally, the Fed could also reduce the quarter percentage point rate of interest that it pays to banks on their reserves, “thereby putting downward pressure on short-term rates more generally.”


I don't see any of these things making much difference, banks have already got plenty of money but aren't lending much of it out. The truth is that the business climate in this country is not good, thanks mainly to Obama's policies. No need to go through the list of issues that are depressing economic grpwth, it boils down to near non-exiastent growth as long as Obama is in the WH and the dems control the Senate.

I think abolishing the (recently arranged) payments on reserves would make a difference. As it stands, banks have an incentive to keep funds in reserves instead of loaning them. if you remove that .25 point incentive, they'll be mildly more inclined to move the money.

I've been wondering why that remained in place for over a year now.

 

[LordBrownTrout]

RP just whipped that Bernake ass.

 

[waltky]

Granny says yea, have dat Bernanke fella print up some more money so's dey can send her dat 2nd stimulus check...

Bernanke: Fed ready to act if economy worsens
Jul 13,`11 WASHINGTON - Federal Reserve Chairman Ben Bernanke told lawmakers Wednesday the Fed is ready to act if the economy gets weaker. He warned them that allowing the nation to default on its debt would send "shock waves through the entire financial system."

Underscoring how fragile the economy remains two years after the Great Recession, Bernanke laid out three new steps the Fed could take, including a fresh round of government bond purchases designed to stimulate economic growth. "We have to keep all the options on the table. We don't know where the economy is going to go," Bernanke told the House Financial Services Committee. The Fed chairman stopped short of promising anything, but Wall Street appeared comforted that the central bank was poised to act. The Dow Jones industrial average was up more than 150 points during his testimony to Congress, and closed up 45.

But some of the early stock gains were lost after Richard Fisher, president of the Federal Reserve Bank of Dallas, said in a speech that the Fed had already "pressed the limits of monetary policy." The nation was creating about 200,000 jobs a month this spring. But hiring slowed almost to a standstill in June, with 18,000 new jobs. It takes about 125,000 a month just to keep up with population growth. While Bernanke made his twice-yearly appearance before Congress, lawmakers and the White House were trying to salvage talks on how to reduce the federal deficit and whether to raise the limit on what the government can borrow.

If they fail to strike a deal on the debt limit by Aug. 2, the White House has said, the nation will default. President Barack Obama has said he cannot guarantee even that Social Security checks would go out the next day. Moody's Investors Service threatened Wednesday to lower the United States' credit rating, saying there is a small but rising risk of default. Economists have warned that the credit system would tighten, not unlike the worst days of the 2008 financial crisis. Before Congress, Bernanke added his own dire predictions. "If we went so far as to default on the debt, it would be a major crisis because the Treasury security is viewed as the safest and most liquid security in the world," he said.

"It's the foundation for most of our financial - for much of our financial system," he added. "And the notion that it would become suddenly unreliable and illiquid would throw shock waves through the entire global financial system." Asked whether interest rates would go up for everyday Americans, Bernanke said: "Absolutely." The Fed bought $600 billion in government bonds late last year and early this year, a program designed to keep interest rates low and support the prices of assets such as stocks.

MORE

See also:

QE3? Fed Chairman Says They Might Do it Again
Wednesday, July 13, 2011 - Bernanke: Fed would supply more stimulus if needed

Federal Reserve Chairman Ben Bernanke said Wednesday that the central bank is prepared to provide additional stimulus if the current economic lull persists. Delivering his twice-a-year economic report to Congress, Bernanke laid out three options the central bank would consider. Bernanke said the Fed could launch another round of Treasury bond buying, the third such effort since 2009. It could cut the interest paid to banks on the reserves they hold as a way to encourage them to lend more.

The Fed could also be more explicit in spelling out just how long it planned to keep rates at record-low levels. That would give investors confidence about the Fed's efforts to continue supporting the economy. Bernanke maintained that temporary factors, such as high food and gas prices, have slowed the economy. He said they should ease in the second half of the year. But if that forecast proves to be wrong, he said the Fed is prepared to do more.

"The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support," Bernanke told the House Financial Services Committee on the first of two days of Capitol Hill testimony. Bernanke also said it was possible that inflationary pressures spurred by higher energy and food prices may prove more persistent than the Fed is forecasting. He said that the central bank would be prepared to start raising interest rates faster than currently contemplated. Most private economists believe the Fed will not start raising interest rates until next summer. And some say the Fed won't increase rates until 2013, based on the slumping economy.

MORE

 

[thereisnospoon]

Bernanke is on crack. They want to print more fake money. Great. At this rate the price of Gold will be $3,000 per Oz., Oil will be $200 per barrel, gas will be six bucks a gallon and the Dollar will be worth less than the Peso

 

[Oddball]

Baghdad Ben is certainly on the crack.

What they've done at Da Fed clearly hasn't worked, now they want to do even more of it.

Lemmie guess....They didn't do enough soon enough the first two times around, right?