I support the aggressive steps taken by the Federal Reserve to attack unemployment.
Traditionally, the Fed has been the nation’s guardian against inflation. However, with the inflation rate below 2% and unemployment hovering at 8%, the Federal Reserve has structured a program designed to stimulate economic growth while allowing for only a slight rise in inflation.
Chairman Ben Bernanke and 11 out of 12 policymakers voted to implement QE3 - Quantitative Easing 3. This involves the purchase of $23 billion in mortgage bonds by the end of this month, escalating to $40 billion next month - the number changes in subsequent months as needed. Contrary to QE1 and QE2, which were limited in time and sum, Bernanke is adamant that QE3 will continue until the unemployment crisis is clearly over.
Purchasing mortgage bonds is designed to lower mortgage rates, drive an increase in housing starts, and create high-paying jobs in industries such as construction. This would have a ripple effect on the rest of the economy.
Fed officials believe that unemployment will decrease much more rapidly in the coming year because of their decisive action. Economists outside the government do not expect sudden, dramatic growth, but they do support the proposition that QE3 will have a positive impact over time.
Wall Street applauded the Fed’s action as evidenced by the 1.6% jump in the Dow Jones Industrial Average (206.51 points). Democrats also applauded the move. No surprise - Republicans, including presidential candidate Mitt Romney, did not support the Fed’s action despite their pro big-business agenda.
While QE3 is a positive step, it is not enough by itself. It is time for Congress to do its part and pass President Obama’s jobs plan.
The president’s plan will create good-paying jobs in infrastructure, research, and education. When an organization as conservative as the Federal Reserve sees the need for stimulus, the House and Senate Republicans must break with their obstructionist policies. Congress must put the American people first – they must stop playing “Let’s see what happens at the election,” Russian roulette style.
In particular, Congressman Rodney Frelinghuysen (R-11) has to place the needs of our district and state above those of his party.
New Jersey has one of the highest unemployment rates in this nation (9.8% as of July 2012), ranking very close to the top of 51 states surveyed (including the District of Columbia).
That is not acceptable. I urge Mr. Frelinghuysen to put partisan politics aside and to vote to do what's right for the citizens of our state and our country.