Can the Fed do more to boost economic growth?

July 14, 2011

According to Reuters, U.S. Federal Reserve Chairman Ben Bernanke told Congress this week he is ready to ease monetary policy further if economic growth and inflation slow.

The central bank has already cut interest rates to near zero and last month completed a $600 billion round of bond-buying designed to lower borrowing costs still further.

Asked whether the Fed would be willing to launch another bond purchase program if the economy slumps, Bernanke said on Wednesday: “We have to keep all the options on the table. We don’t know where the economy is going to go.”

Bernanke listed several potential easing options, some of which he also included in a more detailed speech he made in August 2010.

Meanwhile, Tea Party Republicans in the House and the Senate reiterated their mandate to “…rock the credit and stock markets and force up the interest the federal government has to pay on its bonds.”

Senate Republican Leader Mitch McConnell said the debt problem belonged squarely in Obama’s lap.

McConnell said, “Republicans will not be reduced to being the tax collectors for the Obama economy. Don’t expect any more cover from Republicans on it than you got on health care. None.”

House Speaker John Boehner (R-Ohio), told reporters that he thought Senate Minority Leader Mitch McConnell’s so-called “last resort” option for resolving the debt ceiling stalemate should be left on the table.

House Majority Leader Eric Cantor (R-Virginia) has emerged as a key player in the negotiations between the Congress and the White House in talks over how to resolve the debt problem. And, not in a very productive or popular way…

“Eric, don’t call my bluff,” President Barack Obama warned late Wednesday after a dramatic back-and-forth with the Virginia Republican that made some in Cantor’s party wince. “Enough is enough.”

One has to pause and ask, “Did growing up amid Republicans in Richmond, Va., the capital of the Confederacy, somehow taint Rep. Cantor’s ability to deal with modern diversity and reality?”

And, Donald Trump (with Sarah Palin close by his side) was heard weighing in on the rancor in D.C.

Apparently not at all impressed by congressional Republicans Eric Cantor and John Boehner and their brand of negotiating, Trump appeared on Fox News to proclaim, “…the Republicans are doing another ‘el foldo’. This is incredible. It is unbelievable what is going on. The fact is, they are terrible, terrible, frightened negotiators. And I just can’t believe they are doing this.”

It all leaves me thinking that maybe the Civil War never was really resolved.

Here we have a President from Chicago — clearly north of the Mason-Dixon line — surrounded by some of the most capable and best educated economic experts in this country, working to fix an economy which tanked due to bad decisions which took place between 2001 and 2009, doing battle with Southern Republicans, many of whom are newly elected on the Tea Party platform.

I keep hearing Billie Holiday singing “Strange Fruit”.

Am I missing something here?

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