There was at least something to like in Fed Chairman Ben Bernanke's Jackson Hole speech. He didnâ??t hint at using the Federal Reserve's open-ended power to buy up the national debt, so-called QE3, as he had in his year-earlier speech. Regarding monetary policy tools, he went no further than the already aggressive position taking in the early-August meeting of the Fed's Open Market Committee, saying only that: â??The Federal Reserve has a range of tools that could be used..." and that in August the Fed committee had "discussed the relative merits and costs of such tools."
Since there were three dissents at the Fed's August meeting, the high costs of using the nation's central bank to subsidize the national debt -- the dollar's collapse, the price spikes in gold and oil, the 3.6% CPI inflation rate, and the uncertainty over what the Fed might buy next -- must be part of the policy debate. Add to those problems the comfort the Fed's 2010-2011 QE2 bond purchases gave the White House to propose wild spending in its February budget knowing the Fed was bailing them out. Of course the Fed hasn't yet said it won't do it all again in time for the 2012 election.
