Originally published on Wed April 25, 2012 1:17 pm
Federal Reserve Chairman Ben Bernanke said the Fed is ready to implement "balance sheet actions if necessary."
That means if the Federal Open Market Committee feels that the economic recovery is in danger, it is ready to implement a third round of quantitative easing, or bond purchases intended to bring down long-term interest rates and spur borrowing and spending.
"If appropriate... we remain entirely prepared to take additional action," the chairman said. "We will not hesitate to use them."
Policymakers at the Federal Reserve wrap up a two-day meeting Wednesday and will explain what they plan to do about interest rates. The consensus seems to be they'll keep short-term rates near zero to help support the lagging economy.
Five years ago, a subprime mortgage firestorm was melting down the U.S. economy, but most analysts didn't see it happening.
Federal Reserve Chairman Ben Bernanke, testifying before Congress in February 2007, said the housing sector "is a concern, but at this point we don't see it as being a broad financial concern or a major factor in assessing the course of the economy."
If he and the vast majority of economists were blind to the economic and financial calamity taking shape then, could they also be missing the start of a huge economic boom now?