Federal Reserve Says It Can Print More Money If the Economy Keeps Sucking
If at first you don't succeed... you probably ought to try something new, not more of the same
The Federal Reserve indicated yesterday it will continue its program of bond-buying (quantitative easing), and could in fact ramp it up.
Facing the risk of a fourth straight summertime slowdown, Federal Reserve officials raised the prospect of increasing the monthly pace of bond buying above $85 billion to guard against any slump in growth or employment.
The Fed's statement yesterday that it's "prepared to increase or reduce the pace of its purchases" was a signal that its $3.32 trillion balance sheet is a flexible tool for monetary policy that can be adjusted up or down, like interest rates. The statement, released in Washington, countered discussion of the timing of a reduction in purchases at the Fed's March meeting.
The Philadelphia Federal Reserve chairman, Charles Plosser, has been a long-time critic of the quantitative easing money printing program, noting that the longer it continues the more difficult it will be to scale it back without disrupting the economy.
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