It’s Ben Bernanke’s Economy Now

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Jonathan Ernst / Reuters

Federal Reserve Chairman Ben Bernanke delivers remarks about a significant shift in the direction of U.S. monetary policy at the Federal Reserve in Washington, Sept. 13, 2012.

Here’s why you should care about the Federal Reserve’s latest round of bond-buying, announced Thursday by the central bank: One man has assumed the task of  getting the flagging U.S. economy back on track. He says he’ll work for as long as it takes, all by himself if he has to. And he isn’t even an elected official. 

Chairman Ben Bernanke’s decision to make $40 billion in monthly asset purchases until the jobs market recovers marks a dramatic change of course for the Fed, which in the past has limited monetary stimulus to set periods of time. The pace of new bond-buying — or quantitative easing, as it’s technically termed — will lag behind that of similar action taken in the wake of the 2008 financial crisis, but the commitment is completely open-ended.

“To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens,” reads the statement from the Federal Open Market Committee. Translation: The central bank is done with temporary measures. It’s going to see this through until the job market is fully recovered and then some.

(PHOTOS: Chairman of the Federal Reserve Bank Ben Bernanke)

That could be a while. “There’s not a specific number we have in mind, but we see the last six months isn’t it,” Bernanke said at an afternoon press conference in Washington, in which he conceded the Fed alone lacks “tools that are strong enough to solve the unemployment problem.”

The current state of the U.S. economy is blah. The Federal Reserve’s new projections can be found here, but to sum up: Inflation is in check; growth is happening, but barely; unemployment is coming down, but many people are still out of the workforce. There’s been no fiscal pump-priming enacted by Congress since the end of 2010 and major tax hikes and spending cuts, part of last summer’s debt ceiling deal, loom in January if Congress doesn’t act. That dysfunction is part of the reason Bernanke has taken the job all on himself. (“We’re looking for policymakers in other areas to do their part,” he lamented at his press conference.)

(PHOTOS: Political Pictures of the Week, Sept. 7-14)

So what does all this mean for President Obama’s reelection chances? Probably not much. Despite an unsatisfactory status quo, the state of the economy probably hasn’t disqualified him in the minds of most voters. If anything, minor progress over the past year is the reason he’s slightly ahead of Mitt Romney in the polls. Monetary stimulus can help through the power of expectations–data suggest that voters who pay more attention to the news have a sunnier view of the economy and the stock market is over the moon at the Fed’s announcement–but it’s unlikely to jolt the recovery out of lethargy in the next few weeks.

(MORE: Mitt Romney’s Monetary Policy Mystery Continues)

If anything, the more politically meaningful recent economic news came out of Europe, where the continent’s central bank announced its own bond-buying program last week and Germany’s high court approved the European bailout fund on Wednesday. Upshot: A European financial crisis, one of the few cataclysmic events that could seriously damage Obama, is now much less likely to erupt before Election Day.

That doesn’t mean the Fed’s announcement isn’t a political event.  Many Republicans had previously spoken out against any Fed action, and they may accuse Bernanke of trying to swing the election for the man who reappointed him; such critiques seem hollow, however, because Fed action in election years is very common and many of those leveling this charge believe monetary easing hurts the economy rather than helps it.

While Romney’s monetary views remain largely opaque, his campaign’s response to Thursday’s announcement hews toward the latter point. “The American economy doesn’t need more artificial and ineffective measures,” the statement reads. “We should be creating wealth, not printing dollars.” Of course, should he be elected, Romney won’t be able to set monetary policy. That power will still be Bernanke’s, whose term does not end until January 2014. Until then, it’s Bernanke’s show.

MORE: Does Ben Bernanke Have Any Ammo Left?

59 comments
gary stranyord
gary stranyord

oh silly TIME, trying to push the bad economy off on anyone other than Obama..haha..polls are tied now, and undecideds usually vote against the encumbent. Its over..hahaha...

JohnYuEsq
JohnYuEsq

Money means power. Concentrated wealth at the top means extraordinary power at the top. The reason Romney pays a rate of only 14 percent on $13 million of income in 2011 -- a lower rate than many in the middle class -- is because he exploits a loophole that allows private equity managers to treat their income as capital gains, taxed at only 15 percent.

And that loophole exists solely because private equity and hedge fund managers have so much political clout -- as a result of their huge fortunes and the money they've donated to political candidates -- that neither party will remove it.

In other words, everything America is learning about Mitt Romney -- his tax returns, his years at Bain Capital, the video of his speech to high-end donors in which he belittles half of America, his gaffes, the budget policies he promotes -- repeat and reenforce the same underlying reality.

So much wealth and power have accumulated at the top of America that our economy and our democracy are seriously threatened. Romney not only represents this problem. He is the living embodiment of it.

ROBERT B. REICH, Chancellor's Professor of Public Policy at the University of California at Berkeley

jimc
jimc

 You do not understand. Ben is doing a phenomenal great job. Ben’s job is not to save the economy; it is to save the banks (owners of the Fed -- including the Rothschild family).

He is the employee of the (unknown) cartel that owns the BOG. The BOG is a privately owned corporation that claims to be a government agency. Privately owned corporations do not have to publish any accounting records or profits.

The BOG is currently making $4 billion EVERY DAY from the auctions of Treasury securities. That profit is hidden by the FRBNY’s exclusive handling of the auction accounts and distributed to the Primary Dealers (owners) disguised as purchases of securities being redeemed. There is NO PUBLIC information on the disbursements of the funds. Ref. FEDERAL RESERVE HEIST, www.scribd.com/doc/101937790 .www.scribd.com/doc/101937790 .If Ben did not infuse more money into circulation, the banks (owners) would have to devalue their assets to market value. They would be bankrupt. Ben is saving the banks. Temporarily. Congress members receive great increases in personal wealth; and campaign contributions, by supporting the scam. You might ask your senators to audit the auction accounts.It is another chapter in Benjamin Ginsberg’s book, FATAL EMBRACE; “financiers” AND THE STATE. 

If Ben did not infuse more money into circulation, the banks (owners) would have to devalue their assets to market value. They would be bankrupt. Ben is saving the banks. Temporarily.

 

Congress members receive great increases in personal wealth; and campaign contributions, by supporting the scam. You might ask your senators to audit the auction accounts.

It is another chapter in Benjamin Ginsberg’s book, FATAL EMBRACE; “financiers” AND THE STATE.

 

Armand Winter
Armand Winter

Romney has  vowed to fire Bernanke and replace him with a Mormon

drinkeroftherye
drinkeroftherye

Our President's re-election should now be in the bag.  The Fed is back in the business of wealth creation.  The accompanying devaluation of the dollar will lead to immediate rises in commodities and stocks.  Who would want to save money in a bank, US bond or money market earning no interest when the serious return is in the market.  This might even get some of those Wall Street dollars following back into the president's PACs and re-election committee.  Given the stagnant job market, the unemployment rate isn't a good economic indicator in our new-normal economy, stock values are. The really great news is that now there is no end in sight to printing more money - $40B a month, $1/2T per year.  Now, while these lowered interest rates do discourage lower paid workers from saving and hurts living off interest-bearing assets, we have to remember that we are all in this together and that's a reasonable price to pay.  With any luck, if Ben keeps this going long enough, we can also inflate away most of the debt we've been growing.  Now we can show those regressives what real trickle-down looks like.  FORWARD

IQMinusOne
IQMinusOne

Given that so many people here are for money printing, I almost missed your sarcasm.

Rumionemore
Rumionemore

No, it is not Bernanke's economy. It all belongs to the President of the United States of America. Last I heard, that's Barack Obama.

IQMinusOne
IQMinusOne

Time is just saying so that people who are against printing wouldn't blame Obama and still vote for him.

Hoop Ojoop
Hoop Ojoop

Good job shilling for the prez.  Anything to lay blame anywhere except at Obama's door.

Tommy Mcconnell
Tommy Mcconnell

I just got paid $6784 working off my laptop this month. And if you think that's cool, my divorced friend has twin toddlers and made over $9k her first month. It feels so good making so much money when other people have to work for so much less. This is what I do, Red97 DOT c o m

pcl
pcl

This isn't as new or radical as people perceive it to be. The FED always prints money to get the economy out of recessions, but since the FED could always do it in the past by cutting short term rates, which it already controls, no one noticed, and both parties were just as happy to take credit for it by pushing their stone-soup fiscal stimulus of tax cuts and deficit spending. Of course, that stone-soup is part of the reason we're in such debt now. Neither Romney nor Obama can admit it, but either of them will end up counting on Bernanke (or his replacement) to make  their respective policies look good. 

IQMinusOne
IQMinusOne

This stone-soup sounds like disguised bread sharing, also known as socialism. So the issue really is why the disguise? Socialism for science, security, or those who need help is totally understandable. Does everyone want bread for free more than doing some real work?

ifthethunderdontgetya™³²®©
ifthethunderdontgetya™³²®©

 Yeah, well then it's going to end up like stink soup anyways.

We have an unemployment crisis, our corrupt corporations would rather collect government cheese and send jobs offshore, and there's only one answer to that:

New Deal style employment projects.  Exactly what we need.

But you certainly won't hear that, either from the Republicans, or the Republicans Lite like Obama.

~

pneogy
pneogy

"He says he’ll work for as long as it takes, all by himself if he has to. And he isn’t even an elected official."

His mandate is to provide price stability and full employment.  He is trying to do his job - a very difficult job at this moment.  As for not being an elected official, the elected Republicans on Capitol Hill are doing their best to prolong the national agony to achieve their priority that Obama is a one term president

KJak
KJak

Nice to see someone - elected or not - is a dedicated patriot and not just another pompous obstructionist! 

Mary Waterton
Mary Waterton

The article does not make clear the fact that the Fed is going to buy Mortgage Backed Securities as opposed to generic bonds. If you pause for a moment to think, you will realize that purchase of Mortgage Backed Securities will have very little stimulative effect upon jobs. The obvious objective is to support the banks. It should be a signal to anyone paying attention that the too-big-to-fail banks are in trouble again.

Ivy_B
Ivy_B

It will actually help the housing industry which is beginning to recover.

You may be confusing Mortgage Backed Securities with the Credit Default Swaps that caused the crisis.

deconstructiva
deconstructiva

Shhh... don't tell her that printing money is likely to be used for QE. I learned from earlier post and earl / georgia that too many righties are scared of the printing press. Just like Romney still thinks the Soviet Union is our greatest threat, they think we still live in Weimar Germany. They want us to adopt the Ayn Rand gold standard and replace our greenbacks with solid gold coins with Ron Paul's face and "In Gold We Trust" stamped on them.

Leftcoastrocky
Leftcoastrocky

Since  Congress will not pass the American Jobs Act, the fed must act to prevent the economy from falling back into recession.

Daniel Foreman
Daniel Foreman

"No one is surprised by the Fed's action today to inject even more money into the economy through additional asset purchases. The Fed's only solution for every problem is to print more money and provide more liquidity. Mr. Bernanke and Fed governors appear not to understand that our current economic malaise resulted directly because of the excessive credit the Fed already pumped into the system.

"For all of its vaunted policy tools, the Fed now finds itself repeating the same basic action over and over in an attempt to prime the economy with more debt and credit. But this latest decision to provide more quantitative easing will only prolong our economic stagnation, corrupt market signals, and encourage even more misallocation and malinvestment of resources. Rather than stimulating a real recovery by focusing on a strong dollar and market interest rates, the Fed's announcement today shows a disastrous detachment from reality on the part of our central bank. Any further quantitative easing from the Fed, in whatever form, will only make our next economic crash that much more serious."Dr. Ron Paul

KJak
KJak

Do you actually know anything about Mr Bernanke? Do some research. He is considered one of the premiere experts on the Great Depression. I think he knows a bit more than you about matters of economic malaise. 

IQMinusOne
IQMinusOne

 Yes bankers can be really moronic. That's how 2008 happened.

IQMinusOne
IQMinusOne

I hope he doesn't know it so well that he would guide us right into another one of it.

KJak
KJak

That's moronic.

AfGuyReturns
AfGuyReturns

What do they call it when someone tries the same action over and over, expecting a different outcome?

IQMinusOne
IQMinusOne

I think instead of arguing how much socialism is necessary, Dr. Ron Paul said it the best.

Albin
Albin

Saying this is Bernanke's economy is a bit like saying, this child's parents have abandoned it and now she's a ward of the state.  It's true, but it's very, very sad and one wonders if any good can come of it.

ranger99
ranger99

I'd love nothing more than to see so much money printed that the vast fortunes of the nation's 1% are reduced to worthless piles of paper.  (or, more accurately, cloth)

A million dollars for a loaf of bread.....bring it on!

Maybe then the arrogant bums will actually have to do an honest days work for a change and earn their keep from the sweat of their brow instead of relying on accounting gimmicks and "mommy and daddy's" trust fund.

Benevolent Lawyer
Benevolent Lawyer

Romney's so called intellect and economic credentials are a FARCE. Every rich man is not smart. Romney EVISCERATED our economy in MA without any apology. He mocked us, and left.

Here is some more information:

Massachusetts’ infrastructure accrued a $20 billion deficit of overdue maintenance by the end of Romney’s term, according to the Massachusetts Taxpayer’s Foundation. “When you’re not fixing bridges, that’s a sector not creating jobs,” says Massachusetts Democratic Party chair John Walsh. “It’s foolish because you’re not creating savings, you’re just deferring the spending until problems get worse and the cost gets higher.”

So did Romney, who ran on a promise to improve job growth in Massachusetts,

do anything good on that front? No, and he barely even tried.

“During his time as governor he attempted only one statewide economic development initiative: to incentivize manufacturing companies with a rebate on state income tax,” says Barrow. “It didn’t work. I think he really just wasn’t doing a lot.”

KJak
KJak

Explains greatly why he didn't have the brass to attempt re-election. 

ifthethunderdontgetya™³²®©
ifthethunderdontgetya™³²®©

It's a dirty job, but SOMEBODY has to keep throwing money at the banksters.

(Besides Obama and Geithner, that is.)

~

KJak
KJak

Who threw the money at the banks? Remember correctly please whose administration was in charge in 2008.

IQMinusOne
IQMinusOne

 But in the movies we never pay ransoms to hostage takers.

shepherdwong
shepherdwong

Bernanke said at an afternoon press conference in Washington, in which he conceded the Fed alone lacks ”tools that are strong enough to solve the unemployment problem.”

That would seem to undermine your heading just a bit. The fact is, The Congress owns the economy, just like it did for the past three years while Beltway pundits put the responsibility on the President. Is it any wonder we have an abysmally clueless public.

shepherdwong
shepherdwong

 "hahahahahaha...it was a democrat congress that passed the stimulus..."

Of course it was, since Republicans had already decided that they'd rather undermine the American economy than see the Democratic president re-elected. Just like a Republican-RWA-follower to find defending the country against Republican traitors so amusing.

Armand Winter
Armand Winter

Obama proposed a $4 Trillion debt reduction plan that would have kept Samp;P from downgrading us, eliminated the need of the Super Committe, which was ultimately sabotaged by the Republicans resulting in automatic cuts to defense spending... back in April of 2011.

Instead Boehner, Cantor, McConnell, Norquist and the GOP decided to protect Mitt Romney's 15% tax rate.

1) Why can't Romney pay his fair share in taxes?

2) Why do you want Norquist and his Palestinian wife who gives money to terrorists, running this country? - Look it up on wikipedia

3) How does this help job creation?

Rumionemore
Rumionemore

The President can override Congress.

ifthethunderdontgetya™³²®©
ifthethunderdontgetya™³²®©

That's not quite true.

When the Administration's efforts to help people (besides the banks) came up short after the stimulus, you could find the likes of Paul Krugman and Duncan Black crying over and over again for them to do something more...at least, propose something more. 

But they didn't.  Read "Bailout".  The Administration figured doing more for people who weren't banksters would be a moral hazard.

Even the HAMP program which was the alleged trigger for the phony "grassroots"  teabag movement was gamed to be nothing more than "foaming the runway" for the banks which broke the economy in the first place.

~

shepherdwong
shepherdwong

The stimulus was passed by the Congress, just like all spending legislation (and why Obama didn't waste time trying to go back to that dry well). And I didn't say that the Administration could do nothing to help the economy (they have, "QE3" obviously isn't the first Fed action), I said Congress "owns" it. They do. Particularly Republican obstructionists. Focus your fire.

gary stranyord
gary stranyord

hahahahahaha...it was a democrat congress that passed the stimulus you fool, stop trying to re-write history you Obama-loving-douche.

shepherdwong
shepherdwong

" WHO stayed home in 2010, Shepherd Wong?"

Enough erstwhile Democratic voters from 2006 and 2008, disgruntled enough with the slow pace of change from the 2000-2008 Republican/Bush clusterf#ck, to give control of the Congress to traitorous Republicans who ran the country into the ditch in the first place. Even after Clinton and Bush, they were still too idealistic, pig-headed and self-absorbed to tell the difference between a corporatist Democrat and a corporatist Republican.

ifthethunderdontgetya™³²®©
ifthethunderdontgetya™³²®©

By all means, stay home and elect the Republican, that

passive-aggressive strategy has been paying off big-time for the past two years.

WHO stayed home in 2010, Shepherd Wong?

~

Marissa Peyton
Marissa Peyton

The obvious objective is to support the banks. It should be a signal to anyone paying attention that the too-big-to-fail banks are in trouble again. http://Ace16.com

shepherdwong
shepherdwong

"So we're all supposed to run out and support a Democratic President who wants to cut Social Security and Medicare as part of a "Grand Bargain"?"

Oh no. By all means, stay home and elect the Republican, that passive-aggressive strategy has been paying off big-time for the past two years. And of course it was the Republicans that turned the Democratic party over to a pack of corporate wh0res. How else could the Democrats get away with their constant corporatist drift, if not for the relentless corporatist march of the Republican Party?

ifthethunderdontgetya™³²®©
ifthethunderdontgetya™³²®©

The stimulus was passed by the Congress, just like all spending legislation.

Oh sure, and Congress has the war-making authority...  Please, dispense with the civics lesson.  Republican obstructionists didn't stop the Administration from doing more during the 111th Congress.

It was Democratic 3rd way corporatists...like Obama and Geithner.  They didn't try.  They just threw money at the banks.

My fire is focused on this game of good cop-bad cop.  So we're all supposed to run out and support a Democratic President who wants to cut Social Security and Medicare as part of a "Grand Bargain"?

How did we get here, Shepherd Wong?  It wasn't the Republicans that turned the Democratic party over to a pack of corporate wh0res.  It was Bill Clinton, and now Barack Obama that have done that.

~

AfGuyReturns
AfGuyReturns

I think you just answered my question, shep.

shepherdwong
shepherdwong

Sorry, AfG. But I think you already knew the answer. We Boomers have absolutely failed subsequent generations in almost every imaginable way. Lord only knows how many will live long enough to watch the planet cook them alive.

shepherdwong
shepherdwong

Except, apparently, original thinking (probably just couldn't imagine it).

f_galton
f_galton

I agree, you are a failure in almost every imaginable way.