In an effort to jump-start a horrible economy, the Federal Reserve has an action called “quantitative easing” (Don’t ask; that moniker makes no sense to me, either). Federal Reserve Chairman Ben Bernanke has triggered “QE-3”; his third attempt to employ Democrat’s economic policy of spend, spend and spend some more. It won’t work this time any better than it worked the first two times he tried it.
Fed Chairman Ben Bernanke – Is He Praying?
What the Obama administration wants is for Americans to spend more money. Money they don’t have because many millions of us don’t have jobs. Rather than focus on creating jobs, the President – and Bernanke – believe that if banks have more money to lend at extremely low interest rates, Americans will take advantage and buy more. But, if those Americans don’t have the money to buy things, Obama thinks we’ll borrow that money and “charge it”; go deeper into debt than we already are.
The Federal Reserve can create dollars simply by printing more money, which tends to devalue the dollar even more, and it can buy up assets like long-term Treasuries or mortgage-backed securities from commercial banks and other institutions. This feeds money into the U.S. economy and reduces long-term interest rates, (but it’s mighty difficult to reduce interest rates that are already as low as they can go). When long-term interest rates go down, investors are said to have more incentive to spend their money. That hasn’t happened the first two times the Fed tried quantitative easing and it’s not likely to happen this time, either.
Right now, with quantitative easing 3, about the best that can be hoped for is a leveling off of the dire circumstances. In other words, if it doesn’t get worse, he can say “it worked”. This is critically important for a President seeking re-election and the move is highly political, despite what Obama and Bernanke might say publicly. There are other ways to stimulate the economy but Obama refuses to consider them, which makes QE-3 his last ditch effort to save his presidency.
It should be noted that the President could – with one stroke of his pen – win re-election handily by lifting his sanctions on offshore oil and natural gas drilling. Such a move would send the stock market skyrocketing and almost immediately put many thousands of Americans back to work at good paying jobs. But, he’s a Democrat and Democrats refuse to even consider such a move. They’d rather see the country follow the European model and remain in a depressed economic state.
Lower taxes on small businesses and reducing tax rates is another method of jump starting the economy, and it would work. But, Obama is a Democrat and Democrats refuse to lower taxes or eliminate crazy regulations that cause even large businesses to hesitate hiring.
The House of Representatives passed, and sent to the Senate, approximately 25 pieces of legislation designed to create good paying jobs for Americans, but every single piece of legislation sits on Senate Majority Leader Harry Reid’s desk and will die there at the end of this Congressional session because Democrats refuse to even debate them in the upper chamber. The President then has the audacity to say “I want to work with the Republicans”.
He could start by telling Senator Harry Reid to schedule time to consider those Republican proposals. Don’t hold your breath. For political reasons alone, that’s absolutely NOT going to happen. Reid will say “there’s no time” for that to happen, but if the politicians would get off the campaign trail and deal with the financial crises, much could be accomplished. That won’t happen, either. Re-election is “Job #1” – the country be damned.