Bernanke and the non-callous/nutbar Gang of Three inside the Fed rightly justifies it:
“Growth remains slow. Recent indicators point to continuing weakness in overall labor market conditions and the unemployment rate remains elevated,” the Fed said in a statement that listed its reasons for worry about the anemic condition of the American economy. “Household spending has been increasing at only a modest pace in recent months.”Before we get to the GOP, let's look at the Gang of Three, namely Richard Fisher, president of the Federal Reserve Bank of Dallas; Charles Plosser, president of the Federal Reserve Bank of Philadelphia; and Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis. Fisher is an attention-craver, as Texans know. He's probably pimping to be Rick Perry's Secretary of the Treasury. Plosser and Kocherlakota are U of Chicago alums; nuff said.
That said, let's look at the GOP letter to the Fed.
1. It claims the Fed hasn't articulated goals; a lie.
2. It claims quantitative easing hasn't worked; a lie. (It would have worked better with additional other effort by Obama, including running over the GOP more, but that's another story.
3. It claims potential harms from further Fed action. Versus further GOP nonaction?
We're at the point where "The Fed" is now a dogwhistle for wingnuts, like "socialism," "birth certificate," etc.
But, back to the NYT link at top. By itself, this move probably will be of limited effectiveness. And, that leads to the issue of how much the Obama "jobs bill" will do. And, how serious he is about real tax reform behind the "Buffett Rule," especially if/when his Wall Street masters get antsy.
That makes it clearer yet that this is GOP politics. As it won't likely have a big bump, there's little downside. Remember, this is the same GOP that has created two Fed vacancies by refusing to approve largely neoliberal Obama nominees.
The real problem? We have two economies, more and more. Per an AP story, talking about a housing recovery, but only for houses for the rich:
The (rich-others) divide is also making credit a perk of the rich. Mortgage rates are the lowest in decades. But what good are absurdly cheap rates if you can’t get a mortgage? The banks aren’t granting credit to anyone “who even has a smudge on their application,” says Jonathan Miller, founder of real estate consulting firm Miller Samuel. Applications for new mortgages languish at 10-year lows.Bernanke has in the past consistently been cautious on where to trod, and said that Congress needs to take more action. While his Fed predecessor bears plenty of blame for the crisis we're in, and he does a bit himself, Bernanke is right. Ultimately, the Fed can only do so much outside of a political solution.
There is an interesting twist to all of this, on the potentially more serious side. Yahoo says the Fed move could hurt large insurers. Of course, many of them have had underfunded their obligations for a decade and more. Another example what too little regulation from the feds combined with too many guarantees produces. That's especially true on things like annuities, which are being marketed too much.
So, let's outsource FIRE industry CEOs.
At the same time, Bill Clinton makes a good point. As long as interest rates are near zero, we shouldn't worry quite so much about the deficit.