[RWebb]

Originally Posted by jyl

The Fed's problem is that while they have been doing their job of enabling the recovery through supportive monetary policy, for the past couple years Congress has been hurting the economy through tightening fiscal policy - and bouts of no policy at all (aka government shutdown, budget stalemates, etc).

Last year's Congressional tantrum, the threatened default on US govt debt, downgrade, and budget stalemate did real damage to the economy and choked off the recovery that was accelerating. Consumer confidence sank and we had a bad holiday season.

This year the economy has started building up to a recovery again, GDP is improving to around 3%, employment is up, business investment is rising, and what is really promising ist that the global economy is starting to pick up as well. But we are headed for another Congressional budget stalemate, in a few weeks.

Bernanke has been repeatedly warning that fiscal policy has to start carrying its share of the load. He has come as close to chewing out Congress as he can (he is forced to use very nuanced language). He has no faith in them, so he has decided not to risk starting the tapering - even a tapering-lite - right when Congress is about to give the economic recovery another gutshot. I imagine he sees it as the better of evils, and will start tapering (or his successor will) as soon as this risk passes.

well put

and right now, Bernanke et al. are likely worried by more idiotic govt. shutdowns from Congress