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The purpose is to improve the liquidity in the country and also to keep interest rates very low. And he'll accomplish both objectives. The real problem is this is the third effort that he's done of the same kind, and it has had very little effect in terms of getting the economy to grow. There is an argument that it prevented the economy from getting worse. But right now we have made virtually no progress in four years with the biggest fiscal and monetary stimulus in our history. So you have to ask, what is wrong here? One of the main things that is wrong is we still are trying to deal with what they call overleveraging - too much debt in the society. But the other thing, frankly, is that we misjudged and miscalculated the fiscal stimulus. It was not nearly enough and was badly structured, and that did not give the economy the jolt that it needed, given how rapidly the economy was declining.
-Mortimer Zuckerman |
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The U.S. Federal Reserve has launched an open-ended program to ignite a recovery by injecting an extra $40 billion into the economy each month. How does the Fed do it? It buys mortgage-backed securities. Federal Reserve Board Chairman Ben Bernanke stressed that his agency is independent of political pressures, quote, We have tried very, very hard, and I think we've been successful, at the Federal Reserve to be nonpartisan and apolitical. We make our decisions based entirely on the state of the economy and the needs of the economy for policy accommodation. So we just don't take those factors into account. And we think that's the best way to maintain our independence and maintain the trust of the public. Unquote. |
