Volcker: Fed's $900 Billion Plan Won't Do Much To Boost Economy

[laughingliberal]

SEOUL, South Korea (AP, By Kelly Olsen) -- Former Federal Reserve Chairman Paul Volcker says the U.S. central bank's plan to buy hundreds of billions of dollars in government bonds probably won't do much to boost the economic recovery.

The Fed announced Wednesday that it would purchase $600 billion in Treasurys, aiming to lower long-term interest rates in an effort to spur spending and ultimately lower the U.S. unemployment rate, currently at 9.6 percent. The move comes on the heels of previous purchases of $1.7 trillion in mortgage and Treasury bonds.

Volcker told a business audience in Seoul that the Fed's bond plan is obviously an attempt to spur the U.S. economy but "is not the kind of action that's likely to change the general picture that I've described as slow and labored recovery over a period of time." <snip>

<snip> "The thought that you can create a prosperous economy by inflating is an illusion, in my judgment," he told reporters after his speech. "And we should never forget that. I thought we'd learned that lesson and I hope we continue to learn that lesson."

http://www.huffingtonpost.com/2010/11/05/volcker-feds-900-billion-_n_779354.html

[Jim__]

1. Did he have any suggestions as to what would work?

I think the Fed's action smacks of desperation. But we're desperate because there are so few alternatives available - even fewer now that the pukes won the House and so apparently get the Senate and the Executive by default.

[kiranon]

6. Agree. Massive public works projects to upgrade infra structure

creating jobs and rebuilding what is now old and underfunctioning would help but Republicans will never agree to it. It's not high interest rates that are stopping businesses from investing in new equipment/expansion and so on but no customers with money to spend or enough jobs to go around. These are not new ideas and the administration owes it to the public to explain why it thinks printing all this new money will help anything.

[OHdem10]

2. What makes me ill: Bernanke and Geithner both wanted

Congress to pass another stimulus to put the
money into the economy which affects people
and jobs.

Neither party seems willing so Bernake is
forced to use the only tool left: Print Money.


Thank Deficit Hawks if we collapse again.

Deficits are better than Depressions. Deficits
are better than Depressions.

[laughingliberal]

3. There were several problems with getting more stimulus:

1) Summers
2)After passing the inadequate stimulus, the President overpromised (it would check unemployment at 8%) making it easy for Republicans to say it 'failed' and allowing them to disparage the entire idea of stimulus
3)Allowing the deficit hawks to gain control of the message.

[OHdem10]

5. This is a stimulus since Summers left. Just this past month, they

suggested it.

Summers agreed to the first stimulus. When the Hawks on the Hill
put up their fight, he was more willing to go along.

[laughingliberal]

7. Summers only presented 2 of Romer's proposals to the team. Her analysis of a $1.2 trillion stimulus

was never even looked at. Of course, that was the one that would have worked.

And, of course, it wouldn't have passed. Nevertheless, it was important to ask for it.

But, once President Obama told people the inadequate $700 billion/40% in tax cuts stimulus bill that passed would check unemployment at 8%, there was never a chance to go back for more. The Republicans were free, the day unemployment hit 10%, to paint the stimulus as a failure and, totally, discredit the entire idea of stimulus.

It, also, did not help that the President was agreeing with the deficit hawks for a good year before the light dawned on him and Bernanke that cutting spending would sink us. By the time they started telling Congress not to cut spending, the deficit hawks had won the debate.

[bigdarryl]

4. Volcker should be the Fed Chairman another DUMB move by Obama

also Warren Ballentine was speaking about this today he's predicting HIGHER INFLATION with this move in the future

[laughingliberal]

8. Melannie Hobson was on ABC yesterday morning predicting a minimum of 20% on consumer goods.

Oil already up over $13 a barrel.