Bernanke the steamroller
Comment on today’s Federal Reserve policy decision today, which among other things, included the extremely unusual statement that they’re likely to leave interest rates close to 0 through mid-2013, from Ricardo Perli of ISI, a very mainstream Wall Street research operation:
For the first time in a long time, there were three dissents – Fisher (Dallas), Kocherlakota (Minneapolis), and Plosser (Philadelphia). Up to now, FOMC chairmen strived to avoid more than two dissents. The fact that this long-standing practice was disregarded means that Bernanke is becoming more determined to push through what in his view are the appropriate policy moves. We would expect the influence of the hawkish minority to diminish as a result.
Bernanke is very concerned about economic weakness and wants the Fed to do everything it can to stimulate a return to growth. The release is full of unusual mentions of their “dual mandate,” meaning boosting employment as well as keeping down inflation. This is not William Greider’s Fed.
LBO News from Doug Henwood 
“This is not William Greider’s Fed.”
Sorry for my not getting it but what do you mean by that?
@ Kim, my guess:
Greider wrote a good book “Secrets of the Temple” about the Fed during the Reagan era. He’d write about the Fed for Rolling Stone and later the Nation. I learned a lot about the Fed from his writings. (I’d recommend Secrets along with Doug’s ‘Wall Street.”)
Basically Greider described the Fed – accurately in my opinion – as a secretive institution which exists to serve the moneyed interests of the nation. In other words it ignored the employment part of its mandate in favor of sado-monetarism (see the European Central Bank). Bernanke’s Fed has taken to giving press conferences and mentioning the employment part of the institution’s Congressional mandate in its communiques as Doug mentions.
It could do more or at least try to do more. See today’s lead editorial in the NewYorkTimes:
“For starters, the Fed could take modest steps, like shifting its portfolio toward bonds with longer maturities, which would help to keep long-term rates low and nudge investors into riskier investments. It could reduce the interest it pays on the banks’ huge reserves or even tax the reserves to try to encourage more lending. It could also resume buying Treasuries or other securities to provide additional monetary stimulus. A more aggressive strategy would be letting inflation rise above the Fed’s comfort level of 2 percent or so to, say, 4 percent. That could help the economy by easing the repayment of debt. ”
And/Or Bernanke could say what Doug’s been saying that the economy needs more direct fiscal help and that would provide a lot more bang for the buck.
My guess is that since as an academic Bernanke studied the Great Depression and lived through a near-miss, he has become more “dovish” than the 3 dissenters on inflation, or rather more “hawkish” in fighting unemployment. One of the dissenters at least, Kocherlakota – probably all 3 – is very fatalistic about unemployemnt. He believes it’s “structural” and not even fiscal help or job creation programs can do anything about it. It’s the new normal.