Economy on the Rocks, Fed on Vacation

While the United States economy continues to reel in a state of recession, the Federal Reserve board – as well as regional bank governors and foreign central bankers – are enjoying a luxurious vacation in Jackson Hole, Wyoming.

On the agenda for Fed chairman Ben Bernanke, other than fine food and wine of course, is a proposal for the Fed’s plan of action against inflation, market growth, and general economic stability. Bernanke’s statement Friday morning was meant to relieve some concern over the sorry state of the U.S. economy, but it should also raise questions about the guidance being provided by our leading bankers.

The Fed chair implicated that inflation projections for the near-term future would be moderated by slow economic growth. The United States should rely attentive regulation to curb inflation; instead, we are hoping that a stagnant economy will keep prices from soaring.

The truth is, we won’t truly know the state of the economy, nor will we be able to assess the damage, until the housing market reaches its “bottoming point.” We cannot take any more impromptu actions with ad hoc policies – as was the case during the last year when the Fed lowered key interest rates seven times – until we truly know what we are dealing with.

There have been some positive turns in the U.S. economy, particularly the significant drop in oil and commodity prices in the last month and the slight rise in the dollar’s value, but they are not consistent enough to build policy around. The price of oil could sky-rocket, likewise the value of the dollar could plummet. Anything is possible with the markets in such a tumultuous state. Unfortunately, our top banker is hoping that the current state of dropping commodity prices and strengthening dollar – which have been inexplicable to many experts – will continue into the foreseeable future, and thus curtail inflation. Our economic contingency plan at this point is a hope and a prayer.

Source MarketWatch:

Click Here For Solutions To America's Economic Problems:

Click here to contact your Representative in Congress.

Spread this message with Digg, Del.icio.us, Reddit, or Stumbleupon, and subscribe to the RSS Feed to track articles