0

The future of the Fed, and the government shutdown

Chairman of the Federal Reserve Ben Bernanke speaks during a news conference in Washington, D.C., September 18, 2013. The Federal Reserve cut Wednesday its U.S. economic growth forecasts for this year and 2014 as it unexpectedly left unchanged its massive monetary stimulus.

The Federal Reserve surprised a lot of economists this week by announcing it was not going to taper its bond-buying program. Fed Chair Ben Bernanke had previously hinted that he was ready to take steps to back off on quantitative easing, but he now says the economy is not up to that quite yet.

"I think what's happening is first we became addicted to the stimulus, and then we became addicted to the communication about the stimulus," says Fortune magazine's Leigh Gallagher. "So when the slightest part of that falls apart, and the communications start to get a little vaguer -- which it has over the past couple of months -- people don't know what to make of it. So whose fault is it when the forward guidance is misunderstood?"

Meanwhile, the government is 10 days away from another possible shutdown. But Reuters' Felix Salmon says he's not worried.

"It's like those stupid wars between the television carriers and the cable stations -- they wind up going off the air and then people get upset and they come back on the air -- government shutdown is a bit like that. Debt ceiling, frankly, is a bit like that as well. As long as we don't actually default on our bonds -- and we're not going to do that, we'll do virtually anything before doing that," Salmon says.

And we've got our #longreads from our Wrappers. Here's what they say you should read this weekend:

From Leigh Gallagher:

From Felix Salmon:

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.
Log in to post0 Comments
With Generous Support From...