This is pretty much as close as it gets to demagoguery.

Consumers are spending less because they are continuing to rebalance towards saving. Businesses are preferring to build up saving buffers rather than investing partially because of this lack of demand and because they are still relatively uncertain about economic conditions given everything from debt worries in Europe, worries of a housing bubble in China, and from the tepid recovery itself.

Obviously in a case like this, the interest rate has very little effect on economy. Not that rates can be cut any lower. They've been at 0-0.25% since the end of 2008 and it appears will stay that way, with the official tagline since then being 'for an indefinite period of time' - something blatantly relevant and obvious that was omitted here.

That and the fact that they are doing something, buying up Treasury bonds from maturing mortgage debt securities.

Not to mention they have been for a while, they took their balance sheet up to $2.3 trillion, an unprecedented amount. It seems only yesterday that the complaint was that the Federal Reserve was taking on too much debt as an unelected government entity.

As for the argument the inflation rate is currently low, changing the money supply through the buying and selling of government securities takes 18 months to fully impact the economy, so it is easy to say there is no inflationary pressure currently, but it is much harder to predict with certainty the situation in one and a half year's time.

I cnt watch this or rachel madow , there way of presneting and structuring centences is so forced and retarded.

ITs like they are spoon feeding a disabled child.

the emphasis on words is like an atmped to make what they are syaing come across as interlectual or important and drematic but instead its just painfull to listen to.

This vid is about schools charging parents for supplies - not the Fed.

On that subject... What a load of bullcrap. The costs of administration and pensions are what are killing schools. There's a school where I live that has SEVEN Vice Principles. The only reason schools are asking for handouts is because they over-promised benefits and now they can't pay the piper.

As Obama would say, "Let me be clear..." Public employee benefits are killing this nation's economy just like Greece, Spain, et al. Public employees (inc. teachers) only need to work a job for about 15 years and then get 100% full pay & medical for the REST OF THEIR LIVES! This insanity is unsupportable, and everyone knows it. What we're seeing is a desperate UNION trying to ride a gravy train off a cliff.

Public sector workers are now paid more than Private sector workers. Private workers have to pay for their own medical and save for their own retirement. I see NO REASON why public employees (teachers too!) can't do the same thing. The only reason schools are having budget shortages is because they can't pay out on the ridiculous benefits they've been promising. Rather than trim the fat and save BILLIONS by trimming thier lavish benefits, they are choosing to run a scam on parents and children. Shame on them.

"But we PROMISED them those benefits..." No we didn't. The SEIU and other unions made back-room deals, cheated, lied, stole, and otherwise gamed the system to get these ridiculous. These are deals that don't work in ANY financial sense. They are preposterous and financially impossible to sustain - and yet they have them. I never got to vote on them. Neither did you. Their benefits are excessive, unfair, unsustainable, and I have no problem slashing them in order to make the system solvent.

>> ^westy:

ITs like they are spoon feeding a disabled child.

>> ^Winstonfield_Pennypacker:

This vid is about schools charging parents for supplies - not the Fed.

I agree it is like they are spoon feeding a disabled child.

And yet, it still doesn't sink in with some people.

@RedSky basically the un-simplified message here is that the Fed to expand its balance sheet again, more than it did before because what it did before a) didn't help the job numbers (still no crops), and b) didn't spark inflation (no flooding, either). Until recently, what the Fed's been doing is shrinking its balance sheet, even though the unemployment numbers and long term bond rates indicate they should be doing more, not less.

If you're questioning whether monetary policy has any effect at all on things like unemployment or demand, that's a larger conversation, but one I'm happy to take on.

The Fed is a private bank. It should be abolished. They have more control over YOU than the government. They set interest rates, expand and contract the money supply. The government likes this FED since the can borrow from it instead of asking the American people for the money. We should be printing our own money supply as mandated in the Constitution.

Now for this video. The Fed HAS dumped Trillions into the economy. The people are not spending/ companies are not hiring because people are scared about this administration policies of raising taxes / OBAMA care/ possible cap and trade. And the banks are hording it.

If the democrats stay in power after this fall election the economy will get worse. If the Republicans gain control and repeal most of of the damaging policies that have been passed in the last 1 1/2 years and promise to stop spending ( like for real, not ) then maybe there will be some good economic news next year.

Netrunner why do you post such leftest crap?

Is this Rachel Maddow brother? He has the exact same speaking style. Is he advocating revolution?! Didn't people on the right just get marginalized for such statements? O wait, I forgot I am far more happy playing paintball then thinking about politics, carry on new channel!

@NetRunner

Given the rock bottom interest rate and the sheer quantity of other measures I think they've rightly concluded that monetary policy has little effect in stimulating an economy out of a downturn. Really it's common sense and historically all but proven that only actual fiscal spending can stimulate a bearish market, much in the same way lowering taxes would have little effect. The incentives, which otherwise would have worked are there, but consumers and investors are behaving irrationally.

Additionally the Federal Reserve's role is really inflation rate targeting than anything else. It's directive is not to stimulate growth but to avoid stifling it. As an unelected and independent agency it's out of place and overreaching if it does anything beyond that and frankly damages its credibility in achieving its main objective.

I agree that the stimulus measure was clearly not sufficient to match the economic downturn and that a swifter recovery from a larger stimulus would likely have paid for itself with increased tax revenue. The blame for that rests with a lack of resolve and commitment by Democrats and partisan opposition by Republicans.

And honestly, when I see MSNBC programs like this blatantly ignoring highly relevant facts, exaggerating their point much in the same way Fox does, (such as by making it seem the Federal Reserve has been passive the past 2 years) it makes me call into question anything else I hear from them.

I see this guy...but I hear Rachel Maddow talking.

Don't get me wrong. I tend to agree with Maddow more than disagree..but I just find her very personally annoying and it must have something to do with that speaking style of hers.

What the fed can do to create jobs is extremely limited. The problem with the labor markets at present are the labor markets, not the fed. 1) Very few job openings are getting applicants with the requisite skills to do the job. 2) Those that have the skills demand more money than the prospective employers find worth paying to fill the position. 3) Abundant upside-down mortgages have significantly decreased the mobility of the labor force.

The fed can do little to remedy any of these problems, other than maybe inflating the currency so quickly that suddenly that salary everyone is used to making is palatable to employers. The fact is, they've already done that, it's just that the dollar is still irrationally overvalued (against, for instance, the yuan).

What I wish they had done is straight up bought the houses, rather than the MBSs. Doing so would have liberated debt laden workers so that they could go start a new life, while reducing the interest profits made by the banks. Instead they chose a strategy of recapitalizing the banks, leaving people to pay exorbitant interest rates on debt they no longer have the assets to cover. I realize it probably would have required a bit more work on the logistics end, and the fed ain't exactly a property management firm, but it would have put the money in the hands of those that needed to spend it the quickest.

>> ^RedSky:
Given the rock bottom interest rate and the sheer quantity of other measures I think they've rightly concluded that monetary policy has little effect in stimulating an economy out of a downturn. Really it's common sense and historically all but proven that only actual fiscal spending can stimulate a bearish market, much in the same way lowering taxes would have little effect.

I wouldn't say history has shown monetary policy to have no stimulative effect, ever. I think history has shown that in certain types of recessions, traditional monetary policy can cease to be effective. Which leaves more unconventional types of monetary policy once advocated by an economics professor by the name of Ben Bernanke. If only he was in charge of the Fed right now, maybe we'd see some more of that from the Fed...

>> ^RedSky:
Additionally the Federal Reserve's role is really inflation rate targeting than anything else.

Not true -- what Hayes said is correct, the Fed has a dual mandate of maintaining low inflation and full employment. The Fed tends to focus more on that first part, often at the expense of that second part. That's a bad thing.

>> ^RedSky:
And honestly, when I see MSNBC programs like this blatantly ignoring highly relevant facts, exaggerating their point much in the same way Fox does, (such as by making it seem the Federal Reserve has been passive the past 2 years) it makes me call into question anything else I hear from them.

I agree that to someone who hasn't been following the Fed's actions at all for two years might be left thinking that the Fed has refused to do anything for 2 years. But I don't think that's intentional mischief, I think it's an oversight by people trying to make a somewhat opaque topic understandable to people whose eyes normally glaze over whenever there's talk about the Fed and monetary policy.

Oh, and based on everything I've read, fiscal stimulus would be the preferred tool to use here, it's just that we've got the usual political paralysis generated by Democratic spinelessness and Republican audacity preventing us from using it.

>> ^bmacs27:

The fed can do little to remedy any of these problems, other than maybe inflating the currency so quickly that suddenly that salary everyone is used to making is palatable to employers. The fact is, they've already done that, it's just that the dollar is still irrationally overvalued (against, for instance, the yuan).

I think I'd characterize that as they tried to inflate the currency, but it didn't work.

Totally agree about buying up the houses though. Back during the TARP debate, that seemed like the most moral way to go about stabilizing the banks -- help out the homeowners, and thereby stabilize the banks.

"that seemed like the most moral way to go about stabilizing the banks"

So the reaction to the immoral acts of organized crime is to ceaselessly discuss overhaul of a broken, inhuman machine? The "fed" insures unending slavery and theft of livelihood and property until it is destroyed. The fed is a vital organ of a diseased body: Continue to allow thugs and gangsters control and the insatiable lust for more power and control becomes the drug.
These criminals think and plan ahead in terms of decades and centuries sir, not from term to term and the only wound they can't recover from is a head shot.

They did inflate the currency. The definition of inflation has nothing to do with the value of the currency. It has to do with the quantity of currency. The actions they've taken have increased the money supply. That's what I meant by the dollar is being irrationally overvalued. The markets haven't priced in their actions yet.

We do agree on the houses however. Oddly enough, that particular form of recapitalizing the banks was referred to as "moral hazard." So if a homeowner can't make good on his liabilities, bailing him out is "moral hazard." If a bank can't make good on its liabilities on the other hand...

>> ^NetRunner:

>> ^bmacs27:
The fed can do little to remedy any of these problems, other than maybe inflating the currency so quickly that suddenly that salary everyone is used to making is palatable to employers. The fact is, they've already done that, it's just that the dollar is still irrationally overvalued (against, for instance, the yuan).
I think I'd characterize that as they tried to inflate the currency, but it didn't work.
Totally agree about buying up the houses though. Back during the TARP debate, that seemed like the most moral way to go about stabilizing the banks -- help out the homeowners, and thereby stabilize the banks.

>> ^bmacs27:

They did inflate the currency. The definition of inflation has nothing to do with the value of the currency. It has to do with the quantity of currency. The actions they've taken have increased the money supply. That's what I meant by the dollar is being irrationally overvalued. The markets haven't priced in their actions yet.

Eh, I know I'm being nitpicky, but the definition of inflation is general price level going up. These days people talk more about second order movements of the CPI, not the rate of change, but the direction and size of the change in the change in CPI, (i.e. inflation rate falling from 2% baseline to more like 0.8%).

There are several categories of definitions for "money supply", but under most of them, they're talking about money that's actually circulating and changing hands, not what's being stuffed into mattresses, or being put into reserve accounts at the Fed (which is where most of the money created by the Fed wound up).

If I print up a trillion dollars, and then bury it in my back yard, I won't have caused any inflation. That's not the market failing to price in my actions, that's the market rightfully ignoring irrelevant cash that's not actually doing anything. If I eventually come to my senses, and realize that's a waste of a trillion dollars, and start investing it and spending it, that will put some upward pressure on CPI.

So far, the people who've gotten the money from the Fed have been doing the equivalent of burying it in their back yard, rather than doing what the Fed wants them to do, and invest it in businesses. One of the ways around that problem is for the Fed to bypass the banks, and directly purchase financial assets. It did that, but it had started pulling back on that, and letting its overall holdings drop as the assets matured.

It could stand to do a bit more. It probably wouldn't fix unemployment entirely, but it would help.

Moving this video to NetRunner's personal queue. It failed to receive enough votes to get sifted up to the front page within 2 days.

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