The Pressure is on the Fed Now to Save the Economy
by Danielle Kurtzleben, usnews.com -- August 9, 2011
[...]
Reducing the federal funds rate -- impossible when it is being held at zero -- is one of the key monetary policies most often used to stimulate the economy. The other is increasing the money supply, which could come in the form of a third round of quantitative easing, a move in which the Fed makes a large-scale purchase of assets from banks.
The financial world was buzzing about the possibility of QE3 even before Federal Reserve Chairman Bernanke indicated at a July congressional hearing that such a policy was on the table. Though the Fed did not make any moves toward easing today, it did leave its options open. The Committee reported that it "discussed the range of policy tools available" and that it is "prepared to employ these tools as appropriate." Nonetheless, three Fed members dissented -- a sign of virtual mutiny.
The fact that QE3 has gained such widespread attention and approval may itself be a sign of desperation. "If you drew up a list of 15 things that could be done in Washington to help support economic expansion and get unemployment down, quantitative easing by the Fed may be no. 14 or 15 on the list. [...]
I wonder what Options 1 through 13 are?
I wonder why there is dissention among the Federal Reserve voting members?
Perhaps Robert Reich can give us a clue for a way out, of what is starting to look like our "Loss Decade"?
Vicious Cycles: Why Washington is About to Make the Jobs Crisis Worse
by Robert Reich, robertreich.org -- July 25, 2011
[...]
The only way out of the vicious economic cycle is for government to adopt an expansionary fiscal policy -- spending more in the short term in order to make up for the shortfall in consumer demand. This would create jobs, which will put money in peoples’ pockets, which they’d then spend, thereby persuading employers to do more hiring. The consequential job growth will also help reduce the long-term ratio of debt to GDP. It’s a win-win.
This is not rocket science. And it’s not difficult for government to do this -- through a new WPA or Civilian Conservation Corps, an infrastructure bank, tax incentives for employers to hire, a two-year payroll tax holiday on the first $20K of income, and partial unemployment benefits for those who have lost part-time jobs.
Yet the parallel universe called Washington is moving in exactly the opposite direction. [...]
Yeah-But, Yeah-But,
Yeah-But ...
the Republicans will never go for that WPA-sytle, putting People to Work stuff.
What are you gonna do? What Republicans want -- GOES!
Not so fast -- there ALREADY are Laws on the Books -- for whenever Republicans, Or the Private Sector, are TOO SLOW to act towards meeting our National Goal -- to put Americans back to work ...
[...]
In the United States, the Humphrey-Hawkins Full Employment Act of 1978 allows the government to create a "reservoir of public employment" in case private enterprise does not provide sufficient jobs. These jobs are required to be in the lower ranges of skill and pay so as to not draw the workforce away from the private sector. However, the act did not establish such a reservoir (it only authorized it), and no such program has been implemented in the United States, though the unemployment rate has generally been above the rate (3%) targeted by the act.
A "Reservoir of Public Employment" ... that sounds pretty good,
But What are the "Triggers"??? ... er nothing, except the "Lack of Full Employment"
and a Private Sector that is dragging its feet about Re-hiring ... Unemployed Americans!
Full Employment Act
The Full Employment and Balanced Growth Act (known informally as the Humphrey–Hawkins Full Employment Act), is an act of legislation by the United States government.
[...]
The Act set specific numerical goals for the President to attain. By 1983, unemployment rates should be not more than 3% for persons aged 20 or over and not more than 4% for persons aged 16 or over, and inflation rates should not be over 4%. By 1988, inflation rates should be 0%. The Act allows Congress to revise these goals over time.
If private enterprise appears not to be meeting these goals, the Act expressly allows the government to create a "reservoir of public employment." These jobs are required to be in the lower ranges of skill and pay to minimize competition with the private sector. [...]
Yeah-But, Yeah-But,
Yeah-But ...
Who's gonna Pay for these Jobs? Congress controls the Purse Strings, remember?
Well NOT ALL of the Financial Strings ....
from the link, on the Full Employment Act
-- Requires the Chairman of the Federal Reserve to connect the monetary policy with the Presidential economic policy.
So instead of another round of "Quantitative Easing" for Wall Street (Round 3),
Maybe we could have some "Quantitative Easing",
for Main Street -- this time around?
... as in Easing the Unemployment Numbers?
Seems only fair. And exceedingly practical too. According to Mr Reich this is a very practical way to Jump Start the Economy -- from the Bottom up.
-- NOT from the "uncertain" Wall Street Billionaires, down. That has proven anything but practical, to getting OUR Economy going.
Maybe that is among the other Dozen Options that the Fed Governors are carefully pondering? ... One can dream ...
Afterall, we ALREADY DO have a Full Employment Law on the Books -- all we have to do, is just follow its prescription.
And put the Nation back on the Path to Full Employment. The Demand Side way. Before we lose our way, for another very long, 5 Lost years.