Fed Chairman Ben Bernanke heard the cry of American’s voters from the midterm elections and stepped up to the plate. Part of what drove him, besides the plea from voters, were the likelihood that he may not have done enough to help President Obama with job creation and spurring small business lending.
“The Federal Reserve will sink $600 billion into government bonds in a bold plan that it hopes will drive interest rates even lower than they already are and start the chain reaction that finally creates jobs and invigorates the economy.” “The Fed said Wednesday that it would buy the bonds at a rate of about $75 billion a month through the middle of next year.” “The idea is to encourage people to spend more money and stimulate hiring, both ways of accelerating economic growth.” “The announcement helped push stocks, which have been rising for weeks in anticipation of such a move, to their highest close of the year.” “But the program was immediately met with worries that it would not help enough and could backfire by causing inflation, creating asset bubbles and further weakening the dollar.” “Bottom line: The plan provides a boost to the economy’s growth, but it is not going to solve our problems,” said Mark Zandi, chief economist at Moody’s Analytics.” “Even with the Fed’s action, we’re going to feel uncomfortable about the economy in the next six to 12 months.” “Ten members of the Fed’s Open Market Committee voted for the program.” “The lone dissenter was Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, who said the program was too risky.” “Among his fears: The Fed’s plan will unleash inflation.” “But Chairman Ben Bernanke said those worries are overblown.” “Concerns about this approach are overstated,” Bernanke said in an opinion piece scheduled to be published Thursday in the Washington Post.” “With the economy weak, the Fed is aiming to avoid the kind of economic stagnation that gripped Japan and led to a “lost decade” during the 1990s.” “The Fed has tried since the 2008 financial crisis to make credit more available to individuals and businesses.” “It’s done so, in part, by keeping the target range for its bank lending rate near zero.” “But lending has remained frustratingly tight.” “And, unemployment has stayed persistently high.” “We could hardly be satisfied,” Bernanke said. “(Aversa, Jeannine, 11/03/2010, Associated Press, Fed will spend $600B in latest bid to help economy, Retrieved from email@example.com).
Truth be told, it’s the banks and those so-called small businesses that have not chipped in to help restore an economy that they help crash. They were given huge tax breaks in 2001 and 2003 yet no major increase in jobs only company profits. As stated in the article above the Fed has been keeping interest rates low since 2008, yet still no new hiring or lending but there has been a continuation of bonuses. There is a reason why the credit scores necessary to receive any type of loan has gone up to a point where very few if any one can qualify for it. It could be that there maybe some who feel much better about getting involved now because their lobbying efforts and campaign donations may have accomplished their goals. Either way until someone can find a way to make “people over profits” fashionable again, business may just continue as usual.