A problem that we have with our current Federal reserve, is that politicians are often unwilling to take on tough, unpopular tasks. Instead some politicians want the Federal Reserve to handle economic matters, matters that they were never designed to handle. That is part of the reason why we have had QE1 and QE2, with some politicians now wanting even more money printing - though this has not been found to help spur economic growth.
"Central Bankers Losing Independence?"
"Bernanke To Dems: Put Your Fiscal House In Order"
excerpt from the article:
"Leadership: After Fed chief Ben Bernanke patiently explained how lousy the economy is, Senate Democrats said he needs to do even more in the way of stimulus. That's like arsonists faulting a fireman for how he fights a fire.
nggsFollowing the 2008 crisis, the Fed slashed interest rates to zero and boosted its balance sheet a jaw-dropping $3 trillion to give the economy a boost. Say what you will, the last three years have without question marked the most stimulative policy followed by the U.S. Fed ever. And whether you believe it has worked or not, the Fed did something.
That's in stark contrast to Democrats in Congress. They blame Republicans for Democrats' own fiscal mistakes, while for three years failing even to produce a budget and now threatening to crash the economy with half a trillion dollars in ruinous tax hikes.
The Obama administration is no better, issuing budget plans that don't even get Democratic support while, just this week, launching an attack on small businesses and vowing to hit entrepreneurs with higher taxes.
Is that why Bernanke used his semiannual Fed testimony Tuesday to chastise Congress and, by implication, President Obama for doing nothing about the nation's fiscal ills? Sure sounds that way.
"The most effective way that the Congress could help to support the economy right now," he said, "would be to work to address the nation's fiscal challenges in a way that takes into account both the need for long-run sustainability and the fragility of the recovery."
Fedspeak translation: Don't sit there, do something.
And he's right. Monetary policy can't solve our problems right now. It's reached a dead end. Fiscal policy — spending and taxes, which are the sole responsibility of Congress and the president — can.
With long-term interest rates near 1.5%, a record low, the Fed can't cut interest rates to stimulate economic growth. Its quantitative easing programs — QE1 and QE2 — have largely failed. Adding a QE3 won't work.
Yet, Senate Democrats want the Fed to do more. New York Sen. Chuck Schumer called the Fed "the only game in town" and told Bernanke, "get to work."
Get to work? That's chutzpah on stilts. Congress has boosted spending from its long-term average of about 20% of GDP to close to 25%, while racking up $5 trillion in debt in just three years...."