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When the U.S. Federal Reserve work does not meet

Us banks list / Friday, August 20, 2010

For 10 years, a prominent U.S. economist launched a harsh criticism of the Bank of Japan entitled "Japanese monetary policy: a case of self-induced paralysis?" With some slight changes in its text, this critique applies today to the Federal Reserve (Fed).

The Bank of Japan faced a similar situation, in general, which now faces the Fed's economy was very depressed and showed few signs of improvement and one would expect strong action. But the rates of short-term interest-standard tool for monetary policy-were close to 0% and could no longer go down. And the bank used it as an excuse to do nothing more.

That was bad behavior, our eminent economist said. Who was he? Ben Bernanke, current Fed chairman Why, then, the Bernanke Fed today is so passive as the Bank of Japan a decade ago? The current U.S. economic problems are not identical to those that had Japan in 1999-2000: undisputed Japan experienced deflation. We do not, yet. But inflation is below the Fed target of about 2%, and falling. And Americans face unemployment and poverty a lot worse than anything suffered by Japan.

However, the Fed is doing almost nothing to address these problems (...) What is going on here? I prefer to think that (Bernanke) political shows, no one willing to engage in open confrontation with other Fed officials last but not least, the policy suffers from an act of negligence on the part of President Barack Obama he waited until month 16 in the government to provide a complete list of nominees to fill vacancies on the Fed board Regardless of the reasons, the fact is that the Fed, which by statute must promote "maximum employment" - is not doing its job. Instead it is inventing reasons to hesitate in the midst of massive unemployment. And while the Fed sits there with his self-inflicted paralysis, millions of Americans lose their jobs, their homes and their hopes for the future.

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