Fool Poll: Should Bernanke Pull the Trigger?

Ben Bernanke and the Federal Reserve are widely expected to embark on another round of "quantitative easing" next week.

In economic terms, this means they'll begin purchasing U.S. Treasury bonds in an attempt to drive down interest rates and inject liquidity into the financial system. In layman's terms, it means they're going to fire up the printing presses.

I can think of a few arguments for and against this.

For: Unemployment is nearly 10%. Job growth is flatlined. Money velocity is in the tank. Money multipliers are abysmal. The housing market is still weak. Income growth is weak. Target inflation rates (Fed's policy) are too low. Several areas of the economy appear far too weak and are in need of a boost. That's the boiled-down argument for quantitative easing.

Against: Real GDP is nearing an all-time high. Real consumer spending is at an all-time high. Corporate profits are at an all-time high. Corporate revenue is at an all-time high. The stock market is higher than it was during most of 2006. Many huge companies, including McDonald's (NYSE: MCD  ) , Amazon (Nasdaq: AMZN  ) , and Apple (Nasdaq: APPL  ) are at all-time highs. GDP growth (just out this morning) shows the economy growing at 2%, which is faster than much of the 2006-2007 period when the economy "was on fire." Even if the economy was falling off a cliff, have you seen the massive pile of excess reserves banks already hold?

Admittedly, I'm on the fence with quantitative easing. But I want to know what you think. Head down to the Fool poll below and weigh in. Toss a thought or two in the comments section while you're at it.

Fool contributor Morgan Housel doesn't own shares of any of the companies mentioned in this article. Apple and Amazon.com are Motley Fool Stock Advisor choices. The Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 29, 2010, at 12:37 PM, topsecret10 wrote:

    Only If It's pointed at his head.... TS

  • Report this Comment On October 29, 2010, at 12:39 PM, topsecret10 wrote:

    What you mean Is they are widely expected to PRINT EVEN MORE MONEY which will keep the dollar at artificially low levels that keep the current stock market bubble Intact..... TS

  • Report this Comment On October 29, 2010, at 12:46 PM, topsecret10 wrote:

    It all has to END at some point In time. It should have ended long ago.... TS

  • Report this Comment On October 29, 2010, at 12:55 PM, rd80 wrote:

    This morning on CNBC, Art Cashin had the best description I've heard of the QE2 plan.

    "Now the Fed will be pushing on a rope with two fingers instead of one."

  • Report this Comment On October 29, 2010, at 12:55 PM, topsecret10 wrote:

    Boom,bust,boom,bust.... welcome to another lost decade... TS

  • Report this Comment On October 29, 2010, at 1:08 PM, mjtri wrote:

    It's a lot better for the Fed to pump money into the economy that if Congress does it. Thus, let's have Congress cut spending and balance the debt and let just the Fed pump money into the economy. We no longer need both pumping money into the economy, especially when at least Congress' money is largely just a giveaway. Hopefully, within the next 6 months, the Fed can begin to relax its foot being on the accelerator.

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