Jeremy Hobson: Global markets seem unimpressed this morning with the news from the Federal Reserve. The central bank's chairman Ben Bernanke announced yesterday he will expand the Operation Twist monetary stimulus program; that means the Fed is buying more long-term Treasury bonds in an attempt to support the economic recovery. But it's less than many economists were hoping for, and it's got some asking if the Fed has exhaused its ability to boost the economy.
Our New York bureau chief Heidi Moore reports.
Heidi Moore: Ben Bernanke is a former professor, an Ivy Leaguer who speaks quietly. But he bristles if you suggest that the Federal Reserve is out of ammunition.
Ben Bernanke: I do think that monetary policy still does have some capacity to strengthen the economy by easing financial conditions.
In the nerdy world of economics, that's a declaration of war.
On the other side of the battleground are economists like Steve Hanke at Johns Hopkins, who say that Bernanke is fighting a losing battle.
Steve Hanke: The portion of the money supply that the Fed accounts for is about 15 percent. About 85 percent is produced by the private banking system. And the private banks aren't loaning much money, they're contracting.
No matter how powerful Bernanke's weapons, they can't fight a global recession.
In New York, I'm Heidi Moore, for Marketplace.