Liberalism: Do You Agree We've Had Enough of It? Message Board

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Politics : Liberalism: Do You Agree We've Had Enough of It?

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From: tonto	8/27/2010 10:25:08 AM
	1 Recommendation of 224750

Did the Fed choose stimulus over dollar stability? The greenback fell and gold rose after the FOMC signaled today that it would keep its balance sheet steady by reinvesting the proceeds of mortgage bonds into Treasurys. This is the first Fed policy shift in about a year. It comes in response to a slower economy and disappointing job numbers, with the Fed downgrading its economic outlook in its FOMC statement. "Fiscal policy is the obstacle right now, not a shortage of money." Larry Kudlow By itself, this is a modest move. But it could be the start of something bigger. If recovery conditions continue to slow, the Fed could be more aggressive by monetizing more Treasury debt and expanding the balance sheet to print money. If it does that, the dollar will depreciate more and gold will rise more. A lot more. But here’s the central problem. The Fed can print more money, but it can’t print jobs — or capital formation, or productivity. With a trillion dollars of excess bank reserves already in the system, there’s no shortage of money. The recovery is being held up by the tax-and-regulatory threats and anti-business attitude coming out of Washington.

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