may have painted a big bullseye on the Federal Reserve when he spoke
last week in Jackson, Wyoming, about the Fed providing additional
stimulus if the economy needs it.
wasn’t specific about what it might do and when it might do
it, Bernanke clearly indicated that the Fed was ready to use the
tools it had at it’s disposal to stimulate the economy given
that (1) the recovery was not as robust as he thought it should
be and (2) that additional fiscal policy stimulus measures were
unlikely to be enacted in the current politics-of-obstruction political
environment. As the minutes of its August meeting, which were released
today, confirmed, Bernanke was definitely talking for a majority
of the board of governors.
at all clear, however, whether Bernanke realizes that the same political
pressure that has brought fiscal policy to a standstill in Washington
is very likely to be applied to the Fed if it decides to move forward.
With Republican policymakers seeing economic hardship as the path
to election glory this November, there is every reason to expect
that the GOP will be equally as opposed to any actions taken by
the Federal Reserve that would make the economy better, and that
Republicans will openly and virulently criticize the Fed for even
thinking about it. The criticism is likely to come both before any
action is taken to try to stop it from happening and afterwards
to make the Fed think twice about doing more.