In July I wrote about the possibility of QE3 and reported that Ben Bernanke told the Senate Banking Committee during the semi-annual monetary policy report the economic recovery was being held back by anxiety over Europe’s debt crisis and the path of U.S. fiscal policy.
It is now being reported that Bernanke and the Fed may take action during its September 12-13 policymaking meeting. MarketWatch reports, “He downplayed the costs of quantitative easing and said the program has worked to ‘provide meaningful support’ to the recovery… Bernanke called current growth ‘tepid’ and said the economy was ‘far from satisfactory’.”
Bernanke concluded his speech in Jackson Hole by stating, “Over the past five years, the Federal Reserve has acted to support economic growth and foster job creation, and it is important to achieve further progress, particularly in the labor market. Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”
Bernanke’s claim that Fed policy is needed to promote a stronger economic recovery and price stability is laughable.
Since the Fed’s creation in 1913 the value of the dollar has decreased by 96% based on the federal government’s official figures.
Even if the official government figures could be believed, they should be enough proof that Fed policy has failed.
However, the Fed and their international counterparts at the World Bank will likely do something in an attempt to fix the problem of growing food prices. Rueters reports, “World food prices jumped 10 percent in July as drought parched crop lands in the United States and Eastern Europe… From June to July, corn and wheat prices rose by 25 percent each, soybean prices by 17 percent, and only rice prices went down, by 4 percent.”
Colin Roche, a spokesman for the development group Oxfam International, said it was not clear whether governments were prepared to take action “before prices spiral out of control and push more people into hunger.”
“This ‘wait and see’ attitude is unacceptable especially when the World Bank report has warned that prices are expected to remain high and volatile,” Roche said.
The statements by Roche & Bernanke should cause you to think. Do you really want more government spending? Do you really want more inflation in the guise of quantitative easing?
I certainly don’t want either and will continue to advocate for more freedom, support honest money and voluntary interaction.