Economic Chaos Will Drive Bernanke to Stimulate Economy with QE3 This Summer

Federal Reserve Chairman Ben Bernanke has let the public know he is concerned that job growth is still too slow and inflation is too low.

He also warned Congressional Representatives that the budget deficit is unsustainable.

The Domestic Job Market

There is no secret that the jobs market is still in the tank. Yes we have created another 1 million jobs, but we have lost close to 8 million in the recession alone not to mention adults that were not working before the recession that are trying to re-enter the job market as a way of forestalling heavy debt loads. You also have graduates from high school and college that are finding there are few jobs available.

President Obama and the US Congress keep returning to debt to help stimulate an economy that needs jobs. This is causing concerns from those countries like China that our reserve currency status maybe in jeopardy. Gold, silver and other commodities such as oil and food are rising in cost again hurting the global common men and women who are trying to meet responsibilities with their families.

The Global Job Market

Recent riots in Egypt have shown the frustration that young people feel over no jobs, while those in government and commerce seem to be raking in money at their expense. All over the Middle East we are seeing much of the same because of widespread corruption. They are the first, but it is a matter of time until countries like England and the United States start feeling the heat as well.

Quantitative Easing III

So what does this say for Ben Bernanke's policy of printing more money?

Well when the unemployment rate drops consumers start buying more and production goes up increasing supplies, which in turn keeps prices stable. But when unemployment increases the inventory supplies decrease causing production to drop, layoffs to occur and prices go up. So if congress spends money on creating jobs and the Federal Reserve prints more money it should help to increase production if congress passes the bills needed to make the equation work.

Now, understandably Fed Chairman Ben Bernanke is doing his part, but because Congress is not totally inline with passing bills that create jobs we are facing massive government debt, which could wipe out the Fed's policy and create huge problems for our country and that of countries overseas.

What is the Answer?

Fed Chairman Ben Bernanke has no choice except make the deal with the devil, which in this case is Congress. If Congress does what they need to do it will work, but so far Congress has failed us. The reason being the excess earmarks, pork or whatever you call it has undermined our abilities as a nation to get the job done correctly.

Congress always tries to blame President Obama and Fed Chairman Bernanke, but the truth is Congress got us in this mess and they need to get us out.

Sources:

Reuters, Bernanke Says Job Growth and Inflation Still to Low, Feb.9, 2011, By Pedro da Costa and Mark Felsenthal

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