Tags: Economists | Fed | Easing | Program | Disappointing | us | bernanke

Economists: Fed Easing Program Has Been Disappointing

Monday, 25 Apr 2011 09:05 AM

The Federal Reserve's loose monetary policies have pumped up the stock market, reduced the costs of U.S. exports and lowered borrowing costs, but for most Americans, these policies have done nothing to ease their economic woes.

While Fed officials did help slow the economy's freefall during the recession, they can't help most Americans who are still suffering from high unemployment rates and rising consumer prices, according to a broad range of economists who say that the disappointing results show the limits of the central bank’s ability to lift the nation from its economic malaise.

"It’s good for stopping the fall, but for actually turning things around and driving the recovery, I just don’t think monetary policy has that power," Mark Thoma, a professor of economics at the University of Oregon, referring specifically to the Fed's $600 billion bond-buying program designed to pump banks with money, tells the New York Times.

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Ben Bernanke
(Getty photo)
Others says the Fed's policies have gone too far by injecting too much liquidity into the economy, including senior Fed officials themselves.

"I wasn’t a big fan of it in the first place," says Charles I. Plosser, president of the Federal Reserve Bank of Philadelphia and one of the 10 members of the Fed’s policy-making board, according to the Times.

"I didn’t think it was going to have much of an impact, and it complicated the exit strategy. And what we’ve seen has not changed my mind."

The Fed's current bond buyback program, known as quantitative easing, ends in June.

While some fear stock prices will dip when the program ends, Fed officials have expressed confidence that markets — and the economy — will stand on their own.

"I wouldn’t expect to see a financial market reaction to the termination of that program," says Janet Yellen, vice chair of the Fed’s Board of Governors, according to the Associated Press.

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The Federal Reserve's loose monetary policies have pumped up the stock market, reduced the costs of U.S. exports and lowered borrowing costs, but for most Americans, these policies have done nothing to ease their economic woes. While Fed officials did help slow the...
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2011-05-25
 

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