The future of the Fed, and the government shutdown
The Federal Reserve surprised a lot of economists this week by announcing it was not going to taper its bond-buying program. Fed Chair Ben Bernanke had previously hinted that he was ready to take steps to back off on quantitative easing, but he now says the economy is not up to that quite yet.
“I think what’s happening is first we became addicted to the stimulus, and then we became addicted to the communication about the stimulus,” says Fortune magazine’s Leigh Gallagher. “So when the slightest part of that falls apart, and the communications start to get a little vaguer — which it has over the past couple of months — people don’t know what to make of it. So whose fault is it when the forward guidance is misunderstood?”
Meanwhile, the government is 10 days away from another possible shutdown. But Reuters’ Felix Salmon says he’s not worried.
“It’s like those stupid wars between the television carriers and the cable stations — they wind up going off the air and then people get upset and they come back on the air — government shutdown is a bit like that. Debt ceiling, frankly, is a bit like that as well. As long as we don’t actually default on our bonds — and we’re not going to do that, we’ll do virtually anything before doing that,” Salmon says.
And we’ve got our #longreads from our Wrappers. Here’s what they say you should read this weekend:
From Leigh Gallagher:
- Profile of Uber founder Travis Kalanick, Silicon Valley badass.
- How Jeremy Stoppelman is growing Yelp his way.
- Jack Kerouac and football head injuries.
From Felix Salmon:
- The surprising story of how Detroit went broke.
- Dick Fuld in exile.
- The political economy of zombies.
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