Federal Reserve Bank replies to the Republican’s letter

Since the Obama administration took over the House of Presidency, The White House, government has been fiddling with US economy with so-called innovative and unconventional methods.

Although it was not the Obama regime that brought the US economy to its knees, the War on Terror and investment banking’s love affair with real estate and derivatives-driven policies realized the concept of global recession.

However, currently unemployment is the problem child in the US and the Federal Reserve Bank is babysitting it for the last couple of years.

Although the unconventional monetary system, quantitative easing (QE), has been put into action by the Feds twice and it has produced results to some extent, the Republicans have been taking stabs at the Feds for one reason and one reason only; the QE will
not work!.

The Feds chairman, Ben Bernanke, however, replied to the GOP (Republican) criticism in the latest press conference.

The agenda, it seems, was the letter sent to Bernanke from the GOP some time ago. The crux of the letter, very obvious, was the criticism shot in the face of FRB about the QE policy. In the letter, signed by Senators Mitch McConnell and Jon Kyl, and Representatives
John Boehner and Eric Cantor, the Republican asserted that the aforesaid system has not brought any change in the unemployment rate in the US.

Instead of dismissing the question, the chairman replied that although the actual results expected from the policies have not been on target but these steps have effectively diverted the deflation and efficiently stabilized the inflation rates.

The chairman of Goldman Sachs, Jan Hatzius predicted that another round of QE is expected at the end of next fiscal year’s first quarter, if the economic growth comes to a halt.

In his reply to the Republicans’ criticism on the Feds’ policies, Bernanke hit both GOP and the government establishment. He asserted on both Republicans and the Obama administration, the Democrats, to focus more on their dual mandate of creating jobs in
the US. Instead of criticizing the Feds, they should help them in maximizing employment in the country.

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Posted by Usman Khalid on Nov 3 2011. Filed under Business. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry