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Bernanke’s False Recovery

Posted By admin On March 12, 2013 @ 11:12 am In Money Watch | Comments Disabled

Bullion Vault [1]
March 12, 2013

ACCORDING to Ben Bernanke, the Chairman of the Federal Reserve, the pulling back on aggressive policy measures too soon would pose a real risk of damaging a still-fragile recovery, writes Dr Frank Shostak for the Cobden Centre [2].

The Fed Chief is of the view that for the purposes of financial stability a continuation of the central bank’s aggressive stimulus conducted through purchases of Treasury and mortgage securities remains the optimal approach.

In response to the financial crisis and the deep recession of 2007-9, the Fed not only lowered official rates to effectively zero, but also bought more than $2.5 trillion in assets in an effort to keep long-term rates low.

But is it true that a loose monetary stance provides support to economic activity? Furthermore, if this is the case then why after such an aggressive lowering of interest rates and massive expansion of the Fed’s balance sheet does the economic recovery remain fragile?

Surely if loose monetary policy could revive economic activity then a very loose policy should produce very strong so called economic growth – so why hasn’t it happen this way?

Full article here [1]


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URLs in this post:

[1] Bullion Vault: http://goldnews.bullionvault.com/bernanke-false-recovery-031220135

[2] Cobden Centre: http://www.cobdencentre.org/

[3] Fed Stimulus Still Needed to Help Recovery, Bernanke Says: http://www.prisonplanet.com/fed-stimulus-still-needed-to-help-recovery-bernanke-says.html

[4] Bernanke: Recovery “close to faltering”, Fed could act: http://www.prisonplanet.com/recovery-close-to-faltering-fed-could-act.html

[5] Fed: Recovery may lose steam: http://www.prisonplanet.com/fed-recovery-may-lose-steam.html

[6] New IMF chief says urgent action needed to protect recovery: http://www.prisonplanet.com/new-imf-chief-says-urgent-action-needed-to-protect-recovery.html

[7] Bernanke: Fed May Launch New Round of Stimulus: http://www.prisonplanet.com/bernanke-fed-may-launch-new-round-of-stimulus.html

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