Bernanke's QE effort applaudable

Commnets on Karen Maley “Primed to pop in the US”, 30/12/2010, http://www.businessspectator.com.au/bs.nsf/Article/Primed-to-pop-in-America-pd20101230-CLT7U?OpenDocument&src=sph&src=rot

Ben Bernanke's idea of creating an asset effect is a good one, though it requires a concerted effort by all relevant US authorities to put the best effort for it to work. The condition can be very difficult to be met.

Should the Fed's single minded effort not work, then the consequences would be more serious than without such effort.

But when the economy is in a crisis situation, and there is no other conventional means to get it out of that predicament, then one is attempted to do something novel.

Another way to achieve that goal is for the authorities to purchase foreclosed houses with a predetermined rule that can stimulate the house market by putting a floor under.

It may be difficult to implement it, but should be more effective.

There might be a middle way to combine QE and house purchasing to stimulate both equity and house markets.

In this sense, the different authorities must work together cooperatively while still not to undermine the independence of the Fed or monetary authority in terms of monetary policy.
They are all possible new macroeconomic ways to deal with the balance sheet recession or possibly more serious depression. The US is now in a similar situation to Japan's in the 1990s.

This crisis or more enduring economic recession requires new policy prescriptions. Bernanke has been trying to do that from the monetary policy point of view.

I wish him good luck on his innovative endeavour.