No new stimulus for now
Bob Moon: An expectant nation. No, that’s a little too melodramatic, isn’t it? But certainly Wall Street was on the edge today, as central bank boss Ben Bernanke laid out his next course of action.
It was, basically, no action — at least for now, on stimulating growth or hiring. Instead, he waded into fiscal policy, which, of course, is not his job. More on that in a moment.
But first, we wondered how expectant you’ve really been in paying attention to all this wonky policy stuff.
Steve Longan: The Fed can’t do everything, it works in step with Congress. And part of the problem that we’re facing right now is a problem with Congress.
Sharon Volkman: I don’t think we should jump to anything right now, things are such a mess, that I think that too many people are coming up with band-aids.
Joe Johnson: Making money cheaper is not gonna help us at all. It’s causing more inflation — we’ve already got food prices going up. Gas is never gonna go back down. Print more money — it’s not going to solve the situation. You’re just throwing money in the hole.
Mark Changizi: I’m frankly too naive about what the Fed does to give an intelligent response. I happen to have a friend on the Fed, but I still don’t know what the heck he does.
The voices of Steve Longan and Sharon Volkman in Portland, Ore., Joe Johnson in Baltimore, and Mark Changizi in New York.
Mr. Bernanke’s message was clear to most of them. Essentially: “The ball’s not in my court.” Our D.C. bureau chief John Dimsdale reports on how that attempted hand-off is likely to go over in Washington.
John Dimsdale: Ben Bernanke is responsible for the nation’s monetary policy: interest rates, inflation, the money supply. But in today’s speech, he focused more on fiscal remedies for the economy: the spending and tax revenue decisions that must be made by Congress and the White House.
Alice Rivlin, a former vice chairman of the Fed, knows why.
Alice Rivlin: The Fed’s done what it could. But getting the debt under control is a fiscal policy matter. Basically the chairman is saying ‘over to you, fiscal authorities,’ meaning the Congress and the president.
Economists, like Joshua Shapiro at MFR Incorporated, say finding a way to stimulate the economy in the short run, while bringing deficits down in the long run, is now up to elected officials.
Joshua Shapiro: The level of interest rates is not the issue. Interest rates are already at zero, so it’s really in the hands of politicians now. Which, judging from what we’ve seen recently, is not a particularly warm and fuzzy thought.
Indeed, Bernanke criticized lawmakers in his speech for this summer’s grueling negotiations over the debt ceiling, which he said damaged the economy. But Bernanke also realizes there are differences within the Fed’s own Federal Open Market Committee about how to stimulate the economy.
Roberto Perli watches the Fed for ISI Group.
Roberto Perli: So he didn’t talk about specifics, and probably he could not do it. He was not in a position to say anything because basically the FOMC hasn’t reached any conclusion.
Which is why Perli says Bernanke announced next month’s Fed meeting will last two days instead of one. He wants to give board members more time to discuss their next move.
In Washington, I’m John Dimsdale for Marketplace.
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