Fed Flummoxed by Stagnation

The Fed is most concerned about disinflation or a period or process of slowing the rate of inflation. But our latest hapless Chair of the Fed, Bernanke, stated that the only issue is whether “the benefits of each tool, in terms of additional stimulus, outweigh the associated costs or risks of using the tool”. The Federal Open Market Committee is split and really no one knows what to do in light of nearly flat GDP growth; Obama has touted this as the summer of recovery but there is no recovery in sight and now the Fed is flummoxed with indecision. No matter how positive the spin is placed on our precarious economic condition it is difficult to avoid the reality indicated by Bernanke who has stated that preconditions for a pick-up in growth in 2011 “appear to remain in place”. The most positive spin Bernanke can attach to our economic condition is possibly the beginning of growth in '11? This is bleak.