Federal Reserve Needs To Reload, Not Retreat

If you need more evidence that Alan Blinder is mistaken and the Federal Reserve isn’t “out of ammunition,” then look no further than Ben Bernanke’s statement to Congress that he’s considering extra stimulative measures.

Considering is good. Actually pulling the trigger would be even better. The truth about monetary policy throughout this recession is that, as Bernanke said of Japan, we’ve faced “self-induced paralysis” and a lack of “Rooseveltian resolve.” There are various downside risks involved in any bold new stimulative approaches, but there are also serious risks involved in failing to restore robust growth.