So Much for the Stimulus Working!!!!....It was just a waste of $878 billion.

So much for Biden and Obama's comments today that the stimulus is working and creating jobs....If I had to believe someone it would be Bernanke, not Biden and Obama!


Federal Reserve Lowers Economic Forecast for Rest of Year

Published July 14, 2010

WASHINGTON -- Federal Reserve officials at their June meeting weighed whether new steps would be needed to keep the economic recovery alive.

A new document, released Wednesday, also revealed that Fed policymakers lowered their forecasts for economic growth this year in light of Europe's debt crisis, a volatile Wall Street, a stalled housing market and high unemployment.

With risks now growing, Fed officials at their June 22-23 meeting saw the need to explore new options for bolstering the economy. That's a turnaround from earlier this year when they were moving to wind down crisis-era supports.

No new specific steps were disclosed or agreed upon.

In the end, Fed Chairman Ben Bernanke and his colleagues agreed to hold a key interest rate at a record low near zero to help energize the economy. And they repeated a pledge to keep rates there for an "extended period."

At that time, Fed policymakers said they didn't think the slowing in the economy seen thus far warranted new stimulative actions besides those already in place, according to the minutes of the June meeting.

However, Fed officials said the central bank "would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably," the document stated.

Fed officials concluded that the "economic outlook had softened somewhat." And a number of members saw "risks to the outlook as having shifted to the downside."

Bernanke has publicly downplayed the odds of the economy sliding back into a "double-dip" recession. He will provide lawmakers in Congress with a fresh economic outlook in back-to-back appearances on Capitol Hill next week.

Economists predict the Fed will keep the key rate at record low well into next year and possibly into 2012. The Fed has leeway to hold it at a record low because inflation isn't a threat to the economy.

In fact, the minutes said that a few Fed officials worried about the risk of deflation. That's a widespread and destabilizing fall in prices of goods, prices of homes and stocks, and a drop in wages. The country's last serious bout with deflation was in the 1930s. Keeping interest rates at record lows would help combat any deflationary pressures.

If the U.S. recovery were to flash worrisome signs of a relapse, the Fed would likely take other steps to get it back on course. It's next regularly scheduled meeting is Aug. 10.

The Fed has left the door open to resume purchases of mortgage securities. It ended a $1.25 trillion mortgage-buying program in March, an initiative credited with driving down mortgage rates and bolstering the housing market earlier this year. However, some question how much of an economic benefit would come from reviving the program now. Mortgages rates are already at record lows but that has failed to energize sales and home refinancings.

A less likely move would be for the Fed to resume buying Treasury securities, a step it took during the crisis. Critics on Capitol Hill and elsewhere alleged the Fed was doing this to bankroll the federal government's record high deficits. The Fed said its government-debt buying program was aimed at lowering a range of rates to help revive the economy.

The Fed could cut its emergency lending rate to commercial banks, now at 0.75 percent. That rate was bumped up in February, when the Fed was started to raise the rate closer to normal. Still, the rate is considered low, and banks have scaled back on their use of the emergency Fed loans.