Ben S. Bernanke, the Federal Reserve chairman, signaled on Wednesday that he did not plan to begin raising interest rates anytime soon, saying the economic recovery would remain halting for months to come. In presenting the Fed’s semiannual monetary report to Congress, Mr. Bernanke did not waver from the Jan. 27 statement of the central bank’s key policy making board, or from a Feb. 10 statement in which he explained to Congress the strategies for gradually reducing the vast sums that banks hold in reserves at the Fed.
When the Fed raised the emergency loan rate for banks, panic and forecasts flew out the Wall Street windows, founts of knowledge that entirely missed the financial crisis. What do they know now? About as much, I'd have to say.
Look at that chart in the background: Net worth of US households - $17.5 trillion of wealth destroyed from July 2007 to March 2009 on the downward trajectory. The perpendicular green arrow indicates when the stimulus bill was signed, February 17, 2009. The upward trajectory indicates $5 trillion recovered since the stimulus. That leaves a net of 12.5 trillion dollars of wealth lost. Surely it is not yet time to raise interest rates and put a brake on the economic recovery. Wonder why those sages who forecast for Wall Street firms can not figure that one out.
While Mr. Bernanke did not change his outlook on interest rates or the economy, he did announce two significant steps to improve transparency and accountability of the Fed, after a period in which the central bank has faced considerable criticism. Significantly, Mr. Bernanke said that the Fed would “support legislation that would require the release” of the names of borrowers that used the extraordinary lending programs the Fed created in 2008 to prop up the markets for commercial paper, money market funds and even consumer loans. The Fed lent to investment banks for the first time and helped arrange the sale of the investment bank Bear Stearns and the rescues of the American International Group and Citigroup.