The fact that the Federal Reserve could be doing much more to stimulate the economy–but so far has chosen not to do so–is finally getting some prominent corporate media attention. The New York Times wrote today (7/15/10), referring to Fed chair Ben Bernanke:
As Mr. Bernanke pointed out in a speech in 2002, when he was a Fed governor, a central bank that has run out of ordinary tools to prop up the economy, like lowering short-term interest rates, still has other options to prevent deflation.
It's good to see discussion of disagreements within the Fed. But these would be more useful if they acknowledged that the Fed's board does not just have technical disagreements about how best to improve the economy; they have political differences over whether it's worth fighting unemployment if there's any risk at all of inflation. That actually existing extreme levels of unemployment are seen by a majority of the Fed as less frightening than purely hypothetical inflation relates to major role that private bankers play in the Fed's governing structure–a crucial fact that is hardly ever mentioned in discussions of Fed deliberations.
See Extra! (6/10): "Framing the Fed as Financial Philosopher Kings: 'Independent' of the Public, but Not Bankers"