Does the Fed Have Enough Ammo?

Everyone has noticed that the economy is not doing great (we all have friends that are looking for jobs) but the Federal Reserve’s comments about the resiliency of the economic recovery seemed to bring this fact home to investors this week.  Their statements have fueled uncertainty as to whether it has the flexibility to light a spark under the US economy.  With interest rates near zero, and a massively larger balance sheet, there are concerns that it has painted itself into a corner.  It is in danger of becoming a one-trick pony with its only quantitative easing option being to buy more Treasuries (which is the same thing as printing more money).  I believe that the key to our economic recovery lies in the fiscal policies that come forth from Congress, particularly policies that are helpful for small businesses.  Unfortunately, with the tax increase looming large in January, more headwinds are coming our way.

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Filed under + Economics, Politics and Financial Planning

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