Catherine Rampell from the New York Times and Cardiff Garcia from the blog FT Alphaville discuss the week’s business news.
On Federal Reserve Chairman Ben Bernanke’s latest statements to Congress earlier this week.
Catherine Rampell: I think he knows what he can do, which is another round quantitative easing…it’s basically pumping more money into the economy. But they’ve already done two rounds of this, and each time you pump more money into the economy, the marginal benefits get smaller and smaller. So there’s a lot of doubt whether that would actually make much of a difference.
Cardiff Garcia: I think Catherine’s right that the marginal benefits get smaller and smaller, but the costs get higher and higher. And you’ve seen recently that Bernanke’s been increasingly concerned about the potential to disrupt some markets if he buys more of the same securities that he has in the past. That being said, it doesn’t mean that there’s nothing else he can do. They can clarify their message on the communications side, and in particular, I think it would probably help if he were to make a statement that he’d be willing to let inflation go above its target for just at least a little while the economy recovered further.
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