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Economic Experts: Fed Out Of Ammo

September 14, 2011 by  

Economic Experts: Fed Out Of Ammo

According to an article by The Associated Press, those watching the Federal Reserve as it makes further moves in hopes of stimulating the economy should expect only a small blip on the economic radar.

Experts, anticipating more Fed action, have already named the central bank’s next round of action “Operation Twist,” representative of the 1960s plan to keep short-term rates unchanged and lower long-term interest rates (effectively “twisting” the yield curve). Many people say that the idea worked then, but it is a largely futile defense against this 21st century global economic meltdown.

The Fed hinted late last week that it will intervene once again. The hint came just as President Barack Obama rolled out his $480 billion new job plan. But many economists, referencing not-so-distant history, believe that more Fed manipulation will have very short-lived benefit, followed by long-term pain.

The last round of Fed action, totaling $600 billion, left the stock market flopping after a short-lived 29 percent rally. The next round could raise worries among money managers about inflation. The Fed is essentially printing money when buying bonds, and pumping more cash into the economy that will eventually lead to higher prices. People are left to wonder: Is the .05 percent expected economic growth worth higher prices at the pump and the local supermarket?

Many experts also concede that the simple fear of Fed intervention can trigger inflation. If money managers worry about inflation, they are more like to buy oil, gold and other commodities to hedge investments, thus driving up the cost of gas, food and other goods.

Some experts say that more intervention cannot hurt the economy. Most experts say it will do very little good or further damage. But, they say, it is the only ammo the Fed has left.

Sam Rolley

Staff writer Sam Rolley began a career in journalism working for a small town newspaper while seeking a B.A. in English. After learning about many of the biases present in most modern newsrooms, Rolley became determined to find a position in journalism that would allow him to combat the unsavory image that the news industry has gained. He is dedicated to seeking the truth and exposing the lies disseminated by the mainstream media at the behest of their corporate masters, special interest groups and information gatekeepers.

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  • Michael J.

    Feds out of ammo?
    So are we the people, apparently. If this faux POTUS is allowed to continue after this breaking news:

    Watch this video!!!!

    http://conservativeamericaonline.blogspot.com/2011/09/obama-social-security-number-fails-e.html

  • s c

    What does this Fed have in common with the stenchified old farts who made the Great Depression worse than it should have been? It’s out of ‘ammo,’ it has no talent, it’s a private corporation that shouldn’t exist, it amounts to the first American use of a redistributed wealth scam, the people who run it should have been imprisoned or deported long ago, Ben the Boob Bernanke (who is supposed to know more than ANYONE about the Great Depression) is a twit, and anyone who thinks the Fed has a real grasp or any clue as to how to get the economy working again is guilty of a raging, communicable case of terminal head-up-arse-itis.

  • James

    The proposed ‘stimulous’ is a misnomer, it doesn’t stimulate the economy it only postpones the inevitable further collapse of it. Also, it adds to the evergrowing national debt. Rather than calling that stupid, I would think of it as diabolical. The feds know precisely what they are doing.

  • http://yahoo skyraider 6

    give 100,000 to each working american family and they will stimulate the economy

    • Michael J.

      skyraider 6,
      OK, just say for schitz and giggles there are 75 million families times $100,000 which comes to 75 trillion dollars. Does that sound feasible?

      Don’t give the lame brained Faux-Potus any bright ideas, he comes up with enough on his own.

    • Raggs

      Another flaw with your idea is that the public ( government & state ) workers already get paid for doing nothing and they do not produce anything of value…

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