Sunday, September 16, 2012

QE3 because "Congress is Lame"?

In the previous post, I noted how George Will was arguing against further monetary expansion from the Federal Reserve.  The day after Will's announcement, the Fed made its own announcement: that it would proceed with the increase in the money supply.  The program is known as the third round of "quantitative easing", or QE3.  All but one of the Federal Reserve governors voted in favor of monetary expansion, including those Will mentioned in his article.

One of Will's arguments was that the Fed was usurping roles that should be the domain of Congress.  Here's the contrary perspective from an op-ed writer at CNN: that the Fed had to act because Congress is "lame".

To be sure, a long-standing belief has been that Ben Bernanke, head of the Fed, would argue for doing "whatever it takes" to avoid a depression (or deflation, which we can discuss later), and that this would include a relatively broad interpretation of the Fed's mandate.

Some may object to the Fed taking on a big role in trying to get the economy going in this way.  In particular, many conservatives (including George Will) object to more Fed action to stimulate the economy, for a host of reasons we can discuss.  But it is also true that - if we take to heart recent polling data on Congressional popularity - a large number of Americans (of various political persuasions) would probably agree with the sentiment about Congressional lameness...      

 

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