Low Job Creation Could Spur More Federal Reserve Bond Buys

job creation, economic recoveryThe Federal Reserve, a PRIVATE banking interest in the United States has sort of committed to buying as much as $600 billion in US government bonds if the unemployment number stays too high or the economy fails to respond, however one or the other of the entities involved decides to define that. The Fed’s stance comes in the face of what the most optimistic among us might term a “fragile economic recovery,” thought we at AMA would be hard pressed to resort to such a rosy term. Job creation is absolutely non-existent and there appears to be no reason to assume that’s going to change any time soon.

Opponents of this twin-pronged buying/selling strategy between the US government and the Fed doesn’t come without its critics, the primary concern being that by choosing to toss a few more billion on the national debt pile will only lead to runaway inflation. Chairman Ben Bernanke addressed these concerns in a “60 Minutes” interview in which he claimed, “The fear of inflation is way overstated.” Bernanke went to say that he estimated it would take the country four or five years to come down from near 10% unemployment to a more historically normal number like 5%.

We’re wondering upon what indications Bernanke bases that claim? The administration has already crammed a few modest-sized countries GDP into our faltering economy with no discernible effect. And more is going to make a difference in job creation. Remember that the definition of insanity is to keep taking the actions and expecting different results. The chairman also issued a strong stance that the Fed could buy less than the $600 billion amount…unless they buy more. No one really knows what’s going to happen. At this point, the only sure bet is that our founding fathers are spinning like hamster wheels in their graves as those charged with overseeing the economic stability of the nation continue to go where no solvent country has gone before when it comes to accumulating debt.

The bottleneck that’s keeping the economy rattling like it has contracted a serious case of fatal pneumonia is not the lack of money in circulation – the banks have plenty of it to loan – but rather an unusually weak demand for loans by the public, and who can blame them? Who wants to be the first to risk job creation in such a vicious fiscal environment?

Not us.

The American Monetary Association Team

American Monetary Association

Flickr / Random McRandomhead

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