Today’s disappointing economic news—consumer sales last month grew less than expected—has fueled debate over whether Congress should pass another huge stimulus. But another trillion-dollar fiscal stimulus won’t be politically possible. Not during a tough election year.
And, as Adam Davidson reports, the debate is moot for yet another reason: the Federal Reserve beat Congress to the punch. This week, the Fed did something awfully similar to announcing a huge new stimulus. Just without all the fanfare.
Over a year ago, the Federal Reserve bought an unprecedented $1.25 trillion worth of mortgage-backed securities. The plan was to only hold the securities for a short period and then sell them. But this week, the Fed announced: not so fast. They are holding onto the securities and effectively easing monetary policy.
Listen to Adam Davidson’s full report on the Fed’s monetary stimulus.