Post by New Mama on Sept 14, 2012 9:54:51 GMT -6
Good old Ben is trying to help Obama in the last 60 days of his campaign. What does he do? He just prints more money. But he's hedging this move with a warning.
www.realclearpolitics.com/articles/2012/09/14/feds_bold_plan_still_might_not_jolt_slow_economy_115450.html
The theory of buying bonds from the big banks now planed at $40 billion a month is intended to drive down interest rates. Banks flush with cash are supposed to lend out the money to businesses so the economy grows.
This stunt didn’t do much the first two times. Maybe it kept things from getting worse, but nothing much has happened in terms of significant, sustained growth.
The problem is most businesses are afraid of what to expect from a president who almost brags about plans to raise their taxes. Add that to banks who are not quick to lend no matter how much the Fed pumps in for the same reason. They’re scared about what a future Obama administration has in store for them.
Yes, the stock market loves the move. Obama can and does point to the Dow today vs. 4 years ago. What most people don’t understand is that keeping short term interest near zero keep bond returns so low that investors are forced to buy stocks.
Chairman Ben Bernanke himself urged everyone to keep expectations in check.
"I personally don't think that it's going to solve the problem," Bernanke said at a news conference. "But I do think it has enough force to help nudge the economy in the right direction."
"I personally don't think that it's going to solve the problem," Bernanke said at a news conference. "But I do think it has enough force to help nudge the economy in the right direction."
www.realclearpolitics.com/articles/2012/09/14/feds_bold_plan_still_might_not_jolt_slow_economy_115450.html
The theory of buying bonds from the big banks now planed at $40 billion a month is intended to drive down interest rates. Banks flush with cash are supposed to lend out the money to businesses so the economy grows.
This stunt didn’t do much the first two times. Maybe it kept things from getting worse, but nothing much has happened in terms of significant, sustained growth.
The problem is most businesses are afraid of what to expect from a president who almost brags about plans to raise their taxes. Add that to banks who are not quick to lend no matter how much the Fed pumps in for the same reason. They’re scared about what a future Obama administration has in store for them.
Yes, the stock market loves the move. Obama can and does point to the Dow today vs. 4 years ago. What most people don’t understand is that keeping short term interest near zero keep bond returns so low that investors are forced to buy stocks.
