Fed extends 'Twist' program to drive rates lower

[Omaha Steve]

Source: AP-Excite

By MARTIN CRUTSINGER

WASHINGTON (AP) - The Federal Reserve is trying again to jolt the American economy out of its stalled recovery. It's extending a program that aims to encourage borrowing and spending by reducing long-term interest rates.

Wednesday's decision followed months of concern that the economy is being held back by a weakened job market.

At the end of a two-day policy meeting, the Fed also sharply reduced its forecast for U.S. growth and said it's prepared to take more action if necessary. It reiterated plans to keep short-term interest rates at record lows until at least late 2014.

"If we're not seeing a sustained improvement in the labor market, that would require additional action," Fed Chairman Ben Bernanke said later in the day.

FULL story at link.



Read more: http://apnews.excite.com/article/20120620/D9VH49EG3.html

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In a June 7, 2012, file photo, Federal Reserve Board Chairman Ben Bernanke testifies before the Joint Economic Committee about the nation's economy on Capitol Hill in Washington. Anticipation is high that the Federal Reserve will announce some new step Wednesday, June 20 2012, to try to rejuvenate the U.S. economy and boost investor confidence (AP Photo/J. Scott Applewhite, File)

[RKP5637]

1. Maybe what they are trying to do is obsolete, same old tricks. Einstein,

insanity is doing the same thing over and over and expecting different results.

[Warren Stupidity]

3. Einstein never said that, and it is not the definition of insanity.

However effectively negative interest rates suck for a variety of real reasons.

[RKP5637]

4. Just asking, I had heard that as a quote for years when I was in physics. It this

wrong then? ... about halfway down the page.

ALBERT EINSTEIN QUOTES

http://www.notable-quotes.com/e/einstein_albert.html

Insanity: doing the same thing over and over again and expecting different results.

Albert Einstein

[Warren Stupidity]

10. Real quotes have real attributions.

They don't just show up naked on a list on the internets. This nonsense quote has also been attributed (again without any actual attribution) to others, for example Ben Franklin.

The other problem is of course that it is at best a layman's description of one symptom of OCD.

Here is a quote summing this nonsense up:

Where did this saying come from? It's attributed to Albert Einstein (probably not), Benjamin Franklin (probably not), Mark Twain (probably not) and mystery writer Rita Mae Brown (probably so) who used it in her novel Sudden Death. It's not clear who said it first, but according to at least one blogger it's "the dumbest thing a smart person ever said." The catchy saying has gathered steam in the past few years (example I, II, III), and regardless of the source, it's gotten a lot of mileage.

And an attribution

[RKP5637]

11. Interesting! Thanks! n/t

[bhikkhu]

2. We're at 2% annual growth, which is not bad

its easier to do harm trying to go higher than that, I think, and slow sustainable growth should be welcome news. Of course, we can imagine that things should be better, but they could be so much worse as well.

[Pale Blue Dot]

5. If we grow at 2%, we can never -

NEVER - pay back our enormous debt; personal, corporate, and government debt.

It's like owing 100% of your yearly salary to a loan shark and saying, "It's ok! I got a 2% raise!" Good luck with that.

[bhikkhu]

6. I'd agree that the interest on debt is an increasing problem

...as in a perfect world the pace of economic growth is matched by the average interest rate of borrowing, more or less, and the size of things stays in balance.

But at 3% annual growth, the size of things must double every 30 years or so. In a finite world of finite resources, it just doesn't work. Exponential growth at any cost causes a host of worse problems we know about and likely many unpredictable ones as well.

[elleng]

7. I assume you mean 2% annual growth is 'not bad' if the unemployment rate is decent.

8.+ percent is not decent. IF it were lower, then 'slow sustainable growth' might be welcome news. It is NOT.

SURE things could be 'so much worse.' Growth could be negative, as it was, and unemployment could be 10+%. SO?

[bhikkhu]

8. regardless of what thoughts of solutions one might have for unemployment

2% economic growth is reasonably healthy, and on the high side of what should be expected.

One practical solution to unemployment would be higher wages, which would allow fewer workers to support more people. The labor participation rate that we have is historically rather high, but this hasn't helped families much as individual wages have been stagnant a long time. Note - better wages and lower participation is the opposite of a Gingrichish vision of full employment for the whole household at low wages just to get by.

[elleng]

9. None of this sounds reasonable to me,

2% growth on 'high side?' Gingrich 'full employment' for pennies?
Higher wages for those lucky enough?
=Reasons I never studied economics.

[sofa king]

12. Shame on the editor for missing the money headline.

"Let's Twist again like we did last summer."

Jeez!