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THE new central bank motto: "Whatever it takes."
After the European Central Bank said it would buy (under certain conditions) as many government bonds as it takes to keep down interest rates, its US counterpart said it will buy $40bn (€30bn) a month in mortgage loans until unemployment improves.
It is, of course, election time in Washington and Republicans will complain about this continued "printing" of money.
But the Federal Reserve also promised to keep interest rates close to zero until 2015 -- three years into the next presidential term. If there is a President Romney, he may well be glad of that. In some ways, the euro crisis is easier to understand than America's sluggish recovery. As well as almost free money for banks, the Fed has created around $2trn of new stuff, while the federal government is borrowing more than 7pc of GDP.
Yet growth has not returned to what is regarded as normal rates and unemployment is particularly slow to come down. There are lots of theories, but no agreement, as to why this should be so.
As well as the $40bn a month to give banks cash for assets backed by mortgages, the Fed's Open Market Committee said it would "undertake additional asset purchases and employ its other policy tools as appropriate."
An even larger "QE4" -- another round of quantitative easing by creating more money on the scale of previous $600bn efforts -- cannot be ruled out. Radical suggestions include ways of getting new money directly to households rather than banks, who seem not to know what to do with it.
Other voices, not all politically motivated, worry abut the inflationary dangers when the banks do find uses for those trillions but the Fed suggested it would want to see clear signs of recovery before tightening.
For the moment, things are moving in the right direction. The eurozone decisions have taken a lot of stress out of the market, with Italian medium-term interest rates at two-year lows. If Europe really does whatever it takes, alongside the Fed, we might begin to get somewhere.
Irish Independent
