News / USA

US Central Bank Tries Again to Boost Economy

Federal Reserve will put $600 billion more into circulation during next few months, in bid to cut interest rates, boost economic growth and cut unemployment

Unemployed people use computers and telephones to search for jobs and seek out unemployment insurance benefits at the Nevada JobConnect Career Center in Las Vegas (Sep 2010 file photo)
Unemployed people use computers and telephones to search for jobs and seek out unemployment insurance benefits at the Nevada JobConnect Career Center in Las Vegas (Sep 2010 file photo)

The U.S. central bank announced on Wednesday that it will put $600 billion more into circulation during the next few months, in a bid to cut interest rates, boost economic growth and cut unemployment.  Critics point out that interest rates are already at historic lows, and they say it is unlikely that further cuts will spur significant growth.

Federal Reserve officials are trying to speed up economic growth to cut the 9.6 percent unemployment rate.

The Fed's plan is to print more money and use it to buy government securities.  That would put more dollars into circulation in the hopes of reducing long-term interest rates paid by businesses and consumers who borrow money.

Equities trader Cort Gwon of FBN Securities in New York supports the plan.

"It will bring a lot more liquidity into the markets, which will help financial firms, banks, lending," Gwon said. "It will help the general economy really get back to growth."

A large volume of money in circulation could lower interest rates much the same way a large number of empty apartments on the market would make it easier for prospective tenants to bargain for lower rents.

Lower long-term interest rates would make it easier for people to borrow the money they need to buy homes.  And lower rates would enable businesses to buy equipment to expand their operations and create new jobs.

Joe Gagnon of the Washington-based Peterson Institute for International Economics calls the proposal "a step in the right direction."

"The Fed needs to do something like this," he said. "I actually think this is less than they should be doing."

Gagnon says the Federal Reserve has two jobs - to maximize employment and to keep prices stable.  And he says the Fed's plan will help on both fronts.  He says inflation is so low now that the economy could fall into a damaging downward spiral of declining prices and wages called deflation.

But critics, like Gerald Hanweck of George Mason University, warn that a flood of new money into the economy will more likely make the value of the dollar decline, sparking inflation.

"It does not seem to have a big benefit, but at the same time it has some costs," he said.

Hanweck says the Federal Reserve's action could do the opposite of what officials intend.  That is because rapidly rising prices would make lenders worry that they would be repaid in future dollars that would be less valuable due to inflation.  That would prompt banks to raise interest rates to protect their investments.  And higher interest rates could stall the economic recovery.

Related report by Mil Arcega:

You May Like

US Border Patrol Union Accused of Taking Sides on Immigration

Report alleges agents leaking info to immigration opponents, appearing at their private events; Center for Immigration Studies director defends agents' actions More

Video Blind Somali Journalist Defies Odds in Mogadishu

Reporting from Somali capital for past decade, Abdifatah Hassan Kalgacal has been working at one of Mogadishu's leading radio stations covering parliament More

Video Rights Monitor: Hate Groups' Use of Internet to Inflame, Recruit Growing

Wiesenthal Center's Abraham Cooper says extremists have become skilled at celebrating violence, ideology on Web More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Hate Groups Spread Influence Via Interneti
X
Mike O'Sullivan
June 30, 2015 8:20 PM
Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video Hate Groups Spread Influence Via Internet

Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video US Silica Sand Mining Surge Worries Illinois Residents, Businesses

Increased domestic U.S. oil and gas production, thanks to advances known as “fracking,” has created a boom for other industries supporting that extraction. Demand for silica sand, used in fracking, could triple over the next five years. In the Midwest state of Illinois, people living near the mines are worried about how increased silica sand mining will affect their businesses and their health. VOA’s Kane Farabaugh has more in this first of a series of reports.
Video

Video Blind Somali Journalist Defies Odds in Mogadishu

Despite improving security in the last few years, Somalia remains one of the most dangerous countries to be a journalist – even more so for someone who cannot see. Abdulaziz Billow has the story of journalist Abdifatah Hassan Kalgacal, who has been reporting from the Somali capital for the last decade despite being blind.
Video

Video Texas Defies Same-Sex Marriage Ruling

Texas state officials have criticized the US Supreme Court decision giving same-sex couples the right to marry nationwide. The attorney general of Texas says last week's decision did not overrule constitutional "rights of religious liberty," and therefore officials performing wedding services can refuse to perform them for same-sex couples if it is against their religious beliefs. Zlatica Hoke reports on the controversy.
Video

Video Syrians Flee IS Advance in Hasaka

The Syrian government said Monday it has taken back one of several districts in Hasaka overrun by Islamic State militants. But continued fighting elsewhere in the northern city has forced thousands of civilians from their homes. In this report narrated by Bill Rodgers, VOA Kurdish Service reporter Zana Omer describes the scene in Amouda, where some of the displaced are taking refuge.
Video

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

France is on high alert after last week's terrorist attack near the city Lyon, just six months after deadly Paris shootings. The attack have added new tensions to relations between French Jews and Muslims. France’s Jewish and Muslim communities also share a common heritage, though, and as far as one French rabbi is concerned, they are destined to be friends. From the Paris suburb of La Courneuve, Lisa Bryant reports about Rabbi Michel Serfaty and his friendship bus.
Video

Video S. Korea Christians Protest Gay Rights Festival

The U.S. Supreme Court decision mandating marriage equality nationwide has energized gay rights supporters around the world. Gay rights remain a highly contentious issue in a key U.S. ally, South Korea, where police did a deft job Sunday of preventing potential clashes between Christian protesters and gay activists. Kurt Achin reports from Seoul.
Video

Video Saudi Leaks Expose ‘Checkbook Diplomacy’ In Battle With Iran

Saudi Arabia’s willingness to wield its oil money on the global diplomatic stage appears to have been laid bare, after the website WikiLeaks published tens of thousands of leaked cables from Riyadh’s Ministry of Foreign Affairs. VOA's Henry Ridgwell reports.
Video

Video Nubians in Kenya Face Land Challenges

East Africa's ethnic Nubians have a rich cultural history that dates back thousands of years, but in Kenya they are facing hardships, including the loss of lands they have lived on for generations. They say the government has reneged on its pledge to award them title deeds for the plots. VOA's Lenny Ruvaga reports.
Video

Video Military Experts Question New Russian Tank Capabilities

Russia has been showing off its new tank design – the Armata T-14. Designers claim it is 20 years ahead of current Western designs - and driving it feels like playing a computer game. But military analysts question those assertions, and warn the cost could be too heavy a burden for Russia’s struggling economy. Henry Ridgwell reports.
Video

Video In Kenya, Police Said to Shoot First, Ask Questions Later

An organization that documents torture and extrajudicial killings says Kenyan police were responsible for 1,252 shooting deaths in five cities, including Nairobi, between 2009 and 2014, representing 67 percent of all gun deaths in the areas reviewed. Gabe Joselow has more from Nairobi.
Video

Video In Syrian Crisis, Social Media Offer Small Comforts

Za’atari, a makeshift city in Jordan, may be the only Syrian refugee camp to tweet its activities, in an effort to keep donors motivated as the war in Syria intensifies and the humanitarian crisis deepens. Inside the camp, families say mobile phone applications help hold together families that are physically torn apart. VOA’s Heather Murdock reports.

VOA Blogs