With the economic outlook unexpectedly darkening, the issue was a seemingly technical one: whether to alter the way the Fed manages its huge portfolio of securities.
But it had big implications: Doing so would plunge the Fed back into the markets and might be a prelude to a future easing of monetary policy, moves that divided the men and women atop the central bank.
At least seven of the 17 Fed officials gathered around the massive oval boardroom table, made of Honduran mahogany and granite, spoke against the proposal or expressed reservations. At the end of an extended debate, Mr. Bernanke settled the issue by pushing successfully to proceed with the move.
The debate over the decision to keep the Fed's $2.05 trillion stock of mortgage debt and U.S. Treasury holdings from shrinking, described in interviews with several participants, set the stage for a more consequential discussion inside the Fed that remains very much alive: what to do next, if anything, about America's stubbornly weak recovery and troublingly low inflation.
You have to read the entire piece to understand the confusion and the severe lack of choices being offered up.
This is merely a prelude to the introduction of massive inflation which will occur in the next decade, the likes of which this country has never seen. As soon as any projections start showing a major economic recovery, inflation is going to hit and many will claim shock, but they should not be surprised when it happens... everyone knows it is coming.
When your top financial experts are divided and are clueless as to what to do, paralyzed and making decisions of this magnitude simply because status quo is no longer feasible, you are screwed.
Obama's economic team has failed spectacularly and the economic stimulus package, all $787 billion of i,t was nothing more than a band aid placed on a gaping wound, postponing decline, stemming the flow and as many predicted beforehand, did nothing to to help unemployment (it is higher now than before the stimulus package was passed), did nothing to put us on the road to recovery.
We will start hearing the rallying cry from liberals and Democrats about how another stimulus plan is needed.. like the first one did so much good?
Throwing good money after bad is not the answer.
Related, John Boehner issued a statement, it is long and explains in detail some common sense solutions, which I will list just the headlining sentences and if you want more, you can go read it.
A PLAN TO BREAK THE ONGOING ECONOMIC UNCERTAINTY
First, President Obama should announce he will not carry out his plan to impose job-killing tax hikes on families and small businesses.
Second, President Obama should announce that he will veto any job-killing bills sent to his desk by a lame-duck Congress – including ‘card check,’ a national energy tax, and any other tax increases on families and small businesses.
Third, President Obama should call on Democratic Leaders in Congress to stop obstructing Republicans’ attempts to repeal the new health care law’s job-killing ‘1099 mandate.’
Fourth, President Obama should submit to Congress for its immediate consideration an aggressive spending reduction package.
President Obama should ask for – and accept – the resignations of the remaining members of his economic team, starting with Secretary Geithner and Larry Summers, the head of the National Economic Council.
At the link provided, under each one of these steps is an explanation.. go read it all.
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