Fed Pledges More Economic Aid; Lenient Policy Strays from Inflation-Fighting Mission, Critics Say

The Washington Times (Washington, DC), September 22, 2010 | Go to article overview

Fed Pledges More Economic Aid; Lenient Policy Strays from Inflation-Fighting Mission, Critics Say


Byline: Patrice Hill, THE WASHINGTON TIMES

The Federal Reserve pledged Tuesday to provide more aid to the economy should the sluggish recovery slow even more in coming weeks.

Signaling the likelihood of more lenient money policies in coming weeks, the nation's central bank took no immediate steps on interest rates but noted that consumer spending - the biggest engine of economic growth - remains constrained by high unemployment, modest income growth, lower housing wealth and tight credit.

In a statement after a day-long meeting of its rate-setting committee, the Fed listed the major factors holding back growth: Employers remain reluctant to add to payrolls. Housing starts are at a depressed level. Bank lending has continued to contract.

Even business spending to replace aging computers and software - which had been a strong point for the economy only a few months ago - recently has softened, it noted.

While the Fed expects the recovery will continue at a subdued pace, it noted a risk that growth will fall further, and possibly even plunge the economy into a destructive bout of deflation in which falling prices cause businesses and consumers to put off spending plans even longer.

In an unusual move that touched off controversy, the Fed noted that inflation recently has fallen to levels that suggest deflation could become a problem if the economy does not pick up speed.

It said one of its goals is to boost inflation back into an acceptable range - generally thought to be between 1 percent and 2 percent. The statement is unusual because the Fed is known primarily as an inflation fighter rather than an institution tolerant of rising inflation rates.

The Fed in its statement said it is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.

Some economists say the comment marked a major - and possibly dangerous - change in strategy for the Fed, suggesting it has abandoned its traditional inflation-fighting mission and is now focused on deterring deflation.

Peter Schiff, president of Euro Pacific Capital, said Federal Reserve Chairman Ben S. Bernanke and other committee members effectively redefined the Fed's mandate by raising what Mr. Schiff considers a bogus threat of deflation. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Fed Pledges More Economic Aid; Lenient Policy Strays from Inflation-Fighting Mission, Critics Say
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.