It’s hard for me to keep a civil tongue when chief alchemist Ben Bernanke makes an announcement like this. He’s going to buy more government securities in order to lower the unemployment rate, but this won’t affect the inflation rate. If it does, he’ll stop.
For the first time, the Fed has announced a goal for the unemployment rate. By saying that it anticipates that it will keep interest rates extremely low until the unemployment rate falls to 6.5% (as long as inflation doesn’t get out of control), the Fed has become more aggressive about turning the economy around.
It bears repeating: