Tag: Federal Reserve

Richard Clarida on Fed Policies and the U.S. Economy

According to Pacific Investment Management Co.’s Richard Clarida, Federal Reserve policy is incapable of eliminating the biggest obstacle of U.S. economic recovery.

“The main challenges facing the U.S. are not monetary, he said. “We have the headwinds from the fiscal cliff, from the slowdown in China, from the turmoil in Europe. None of those are monetary-policy issues.”

The U.S.’s GDP fell to 1.5% in the second quarter according to a recent report by the Commerce Department. Unless Congress takes action, the nation is likely to grapple with a ‘fiscal cliff’ of heightened taxes as well as spending reductions on defense and government programs.

Clarida said: “At the margin, I think the Fed believes where it can make a difference it will. But it recognizes that this is not ultimately going to be a monetary-policy solution for these challenges.”

2010 Stock Market: ‘QE2’ Trumps Lack of Jobs

By Michael Baron Original is here

NEW YORK (TheStreet) — The U.S. stock market’s climb this year back above its 2008 pre-financial crisis levels boils down to a simple equation: quantitative easing trumps unemployment.

Or in not quite linear apples-to-oranges mathematical terms, $600 billion is greater than 15.1 million.

The $600 billion figure represents the amount the Federal Reserve is pumping into the system via “QE2” — its ongoing second stimulus program to purchase long-term Treasury securities at a rate of around $75 billion per month through the second quarter of 2011.

While the market dipped initially after the details of “QE2” were announced on Nov. 3, the march of stocks off their July 1 lows of the year was mostly fueled by the expectation that the Fed would step in and do something if lackluster economic data continued to pile up. Continue reading 2010 Stock Market: ‘QE2’ Trumps Lack of Jobs