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From an editorial Thursday in the Chicago Tribune:
The black-and-white film clip, evidently lifted from an old “Our Gang” comedy, is titled “Ben Bernanke as a kid.” It depicts the Federal Reserve chairman as a lovably clueless tyke, feverishly heaving great wads of cash out a window as if something good is sure to follow.
In the 39 months since the end of the Great Recession, Bernanke has toiled to turn a slo-mo recovery into a robust rebound. A week ago Thursday, Bernanke’s Fed announced a huge gambit to do what its previous gambits haven’t: stimulate a labor market that has spent 43 straight months in the cold grip of 8-plus-percent unemployment. You needn’t be a Nobel economist to understand the essentials of his latest plan:
The Fed will print enough money to buy $40 billion a month in mortgage-backed securities – for as long as it takes for the job numbers to grow. In a perfect world, that would drive down interest rates – already quite low – and nudge investors into stocks, real estate and other assets. Oh, the Fed also said it will keep short-term interest rates near zero, where they’ve been since late 2008, at least through mid-2015.
All this easy, easier, easiest credit, which theoretically leads to lots of money sloshing around, is supposed to make people feel wealthier, spur their spending, and thus create more demand for American workers.
Sounds good, unless you’re a saver – perhaps a retiree dependent on investment interest – or you’re old enough to remember how painful it was for many Americans when Paul Volcker’s Fed sought to strangle dangerous inflation three decades ago.
Bernanke, at least, is trying. One more thing he sees that we all see: a Congress and a White House so mesmerized by Election Day that there’s not even a pretense of thinking about retreat from the fiscal cliff.
What confronts Bernanke confronts all Americans: not exactly denial from our political class, but rather our political class’ total abdication in the face of a predictable and date-certain crisis.
