Free Republic

JACKSON HOLE, Wyo. — The Federal Reserve chairman, Ben S. Bernanke, said Friday that the central bank was determined to prevent the economy from slipping into a cycle of falling prices, even as he emphasized that he believed growth would continue in the second half of the year, “albeit at a relatively modest pace.” To help sustain the economy, Mr. Bernanke gave his strongest indication yet that the Fed was ready to resume its large purchases of longer-term debt if the economy worsened, a move that would add to the Fed’s already substantial holdings. “We have come a long way,...

Fitch Ratings has warned that it may take massive asset purchases by the European Central Bank to prevent Europe's sovereign debt crisis escalating out of control. Brian Coulton, the agency's head of sovereign ratings, said German members of the ECB appeared to be blocking the sort of muscular intervention in southern European bond markets needed to restore the shattered confidence of investors. "There has been an unwillingness to follow through, and markets are going to want to see the ECB's money. It will require hundreds of billions in my opinion," he told a global banking conference. The ECB agreed to...

By the end of March, Barack Obama's administration will face its destiny, its Brutus a pawn of the fates. In Jimmy Carter's presidency, the Wall Street Journal editorialized about "Ratcheting to Ruin." The title derived from the fact that each cycle high in unemployment was higher than previous ones, and each cycle high in inflation was also. "Stagflation" was the neologism coined to describe what up until then was believed to be impossible in the Keynesian world. This period ushered in a new era in both politics and economics. Carter was replaced by Reagan, and Keynes was replaced by Friedman. Thirty...

Today's FOMC statement shows that while the politicians take blame and credit for the economy, the real economic puppet master of the economy is the Federal Reserve. Now, the Fed didn't change the Fed Funds Rate. It's still between 0-.25%. That's no surprise. The Fed essentially said that while things are still bad they are improving. In fact, the Fed referred to the economy as "leveling out". Here's their assessment of the economy.

US and UK on brink of debt disaster 20 Jan, 2009, 0419 hrs IST, AGENCIES LONDON: The United States and the United Kingdom stand on the brink of the largest debt crisis in history. While both governments experiment with quantitative easing, bad banks to absorb non-performing loans, and state guarantees to restart bank lending, the only real way out is some combination of widespread corporate default, debt write-downs and inflation to reduce the burden of debt to more manageable levels. Everything else is window-dressing. To understand the scale of the problem, and why it leaves so few options for policymakers,...