Tom's Take: FRB: Testimony--Bernanke, Semiannual Monetary Policy Report to the Congress--July 17, 2013

See: FRB: Testimony--Bernanke, Semiannual Monetary Policy Report to the Congress--July 17, 2013

"...the risks remain that tight federal fiscal policy will restrain economic growth over the next few quarters by more than we currently expect, or that the debate concerning other fiscal policy issues, such as the status of the debt ceiling, will evolve in a way that could hamper the recovery." True.

"...the Federal Reserve will be holding its stock of Treasury and agency securities off the market and reinvesting the proceeds from maturing securities, which will continue to put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative." This is a change to what I had been suggesting.

"In normal circumstances, the Committee's basic tool for providing monetary accommodation is its target for the federal funds rate. However, the target range for the federal funds rate has been close to zero since late 2008 and cannot be reduced meaningfully further." True, but the Fed could charge interest on excess reserves. It could at least reduce the interest it is paying on those reserves.

Also, unemployment rates that don't reflect the scale of wages and salaries and other compensation and benefits is not going to be fine tuned enough. The Fed needs to take this into account rather than simply comparing the flat employment rates pre and post the Great Recession as is the total compensation of each of the employed is somehow irrelevant to the overall health of the economy.

That said, I hope people realize that Ben Bernanke has done a vastly better job than did Alan Greenspan, not that I believe his job should even exist.

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  • Tom Usher

    About Tom Usher

    Employment: 2008 - present, website developer and writer. 2015 - present, insurance broker. Education: Arizona State University, Bachelor of Science in Political Science. City University of Seattle, graduate studies in Public Administration. Volunteerism: 2007 - present, president of the Real Liberal Christian Church and Christian Commons Project.
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