Neil Irwin reports “Federal Reserve weighs steps to offset slowdown in economic recovery.” That’s excellent news, though as Kevin Drum observes that’s actually being considered here is extremely modest. Still the fact of the matter is that a month ago all the buzz you heard out of the Fed was about “exit strategies” and the change in direction is significant. What’s more, next week the Senate Banking Committee is finally going to do hearings on Barack Obama’s nominees to the Fed Board. The Chairman plays a dominant role in the Fed’s deliberations, but the Board members do matter so having some Obama appointees around to counter some of the hard money fanatics from the regional banks should be helpful.
My bottom line is that people ought to realize that as a matter of practical politics additional expansionary policies are much more likely to come from the Fed than from the United States Senate at this point. Opinion leaders need to focus more attention on this lever.
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