Federal Reserve’s Emergency Actions Need Exit Strategy or Economy Suffers More
Filed under: Ben Bernanke, Recession, U.S. Economy, U.S. Financial Crisis
You should read this story out on the Reuters wire today regarding the $1.3 Trillion the U.S. Federal Reserve has thrown at the financial markets over the last year. It’s lede:
NEW YORK (Reuters) – When U.S. central bankers eventually move to wean markets off the emergency support put in place to rescue the economy, they will face the difficult and delicate task of timing it right.
If they wait too long, they risk sky-high inflation or another asset bubble. If they move too fast, they risk undermining any incipient economic recovery.
Even against the current backdrop of a miserable economic outlook and the specter of deflation, a growing number of voices are warning that the Federal Reserve needs a clear and credible exit strategy for its unprecedented policies.
You may also want to refer to this post regarding the emergency support actions the Fed has taken recently.
If the Fed doesn’t get this right we may be in store for a longer recession, hyper-inflation or the collapse of yet another economic bubble.
