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Federal Reserve Begins To Withdraw $2.2 Trillion From American Economy

Posted By admin On February 16, 2010 @ 8:48 pm In Economic Crisis | Comments Disabled

Dale McFeatters
Scripps Howard News Service
February 16, 2010

[efoods]The Federal Reserve Board faces a delicate task. Having pumped $2.2 trillion into the economy to fight the recession, it must start pulling that money back. It would have to sop up over half of that liquidity to get back to pre-recession levels.

The problem: Do it too quickly and the Fed might cut off or curtail the recovery. Wait too long and risk setting off a punishing round of inflation.

Ben Bernanke, as Fed chairmen typically do, gave only vague hints as to how he would accomplish that. In testimony never delivered to Congress because of this week’s blizzard but released anyway, it was clear that whatever the central bank does, interest rates are going up.

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