The American 1% = Somali warlords intercepting aid
Ben Bernanke has done a very fine job in finding every way within his power to pump stimulus into the US economy, seeking to increase GDP and decrease unemployment.
Unfortunately, a Fed chair has a limited tool box. He cannot set up a WPA or send every American a check.
He can reduce the cost of borrowing and depress bond prices and thereby create a lot of wealth in equity markets.
This is very similar to international response to drought and mass-starvation in Somalia, which was to deliver a lot of food. The international aid would then be grabbed by Somali warlords for their own use.
The international community reasoned that just because much of the food was going to the wrong people was no reason to stop sending food. Throw in enough food and eventually at least some of the starving people will get it. You do what you can.
The federal reserve has the indirect but very potent ability to pump up the stock market and drive down interest rates. Tons of new wealth has been created on Wall Street.
But it has not been spent (enough) on domestic goods and services, thereby creating JOBS. The money is there, in stocks, in bank earnings, in bank deposits. It simply has not been used (enough) in ways that expand employment, let alone expand wages.
Bernanke, however, cannot direct that money. No more than some international food aid program could militarily defeat the warlords, or force the warlords to open soup kitchens.
And this is where Congress would come in, if we had one. With the Fed creating upward pressure on stock prices, a Congress that cared about the nation would have been using fiscal policy to scrape off some of that ongoing windfall. Somehow.
But the fact that the Congress has done nothing, and will do nothing to help anybody is why the Fed has to do these extraordinary things year after year in the first place. If Congress was interested in helping America we would have had more fiscal stimulus, easing the need for much less efficient trickle-down monetary stimulus.
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