The New York Fed Confirms the Economy Runs on Zombie Money
The world is waiting for more of those cryptic messages from the head of the Fed, who today listens to the name Ben Bernanke and speaks on Capitol Hill. Today may not be an FOMC announcement occasion, but there's still the eternal hope that Ben will give a sign, even though it will undoubtedly be excruciatingly small and ambiguous, that more free public money is on the way for the financial system. There's a nice report out on how and why that works. But first, to give some perspective, here's this from UPI today:
Bernanke likely to point to new stimulus
Ben Bernanke was expected to tell U.S. lawmakers Tuesday the Federal Reserve is poised to embrace new stimulus measures but won't say when, economists said.
Bernanke's message to the Senate Banking Committee at 10 a.m. EDT is expected to be that the Fed is "prepared to take further easing action as appropriate, but will give no indication that such action is imminent," economists at Barclays Investment Bank said in a research note ahead of the Fed chairman's semi-annual report to Congress. Bernanke is to testify before the House Banking Committee Wednesday.
Minutes of the Fed's June meeting, released last week, indicated "a few" of the 12 officials who vote on Fed policy thought quantitative easing and other stimulus measures "likely would be necessary to promote satisfactory growth." Several others said they would consider such steps only if economic conditions deteriorated, the minutes indicated.
The Fed announced after its June 19-20 meeting it would continue until year's end an effort to reduce business and consumer borrowing costs by rearranging its portfolio.
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