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Gird Your Coins: Fed May Consider More QE Stimulus

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By Doug Powers  •  August 2, 2011 08:16 PM

**Written by Doug Powers

Confident? Me neither.

Bloomberg:

Federal Reserve policy makers may start weighing additional steps to prop up the recovery after growth fell below 1 percent in the first half of this year and economists began cutting second-half growth forecasts.

“At a minimum, the FOMC will have a serious debate about the policy options — what they should do, and what they expect to get from it,” said Roberto Perli, a former associate director in the Fed’s Division of Monetary Affairs, referring to the Federal Open Market Committee. “Growth in the first half was dangerously close to zero,” said Perli, director of policy research at International Strategy & Investment Group.

The FOMC will meet Aug. 9 in Washington after the government marked down its measure of economic growth to annual rates of 0.4 percent in the first quarter and 1.3 percent in the second, casting doubt on the Fed’s June outlook of 2.7 percent to 2.9 percent growth for this year. A gauge of U.S. manufacturing, a main engine for the expansion, slumped last month to the lowest level in two years.

Chairman Ben S. Bernanke said in congressional testimony in July that the Fed may take new action if the economy stalls, including beginning a third round of bond purchases.

These guys have been “propping up recovery” for quite a while, and the more they prop, the more comatose the economy gets. I think there’s a movie there somewhere. Has the title “Weekend at Bernanke’s” already been used? Darn.

Forget about “Quantitative Easing III” — how about some quantitative “back off and let the economy try and cycle to recovery”? Not likely.

**Written by Doug Powers

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