Time to print more money?

The Federal Reserve signals that it might pump more dollars into the economy if things get worse. Is that a good idea?

cash money
(Image credit: Corbis)

With the recovery faltering, the Federal Reserve is considering expanding the money supply to give the economy another boost. In newly released minutes from September's Fed meetings, policy makers appeared ready to launch a second round of so-called quantitative easing — purchasing Treasury bonds to drive down interest rates and raise expectations of inflation, encouraging consumers to buy more now. But opponents of the move say the Fed would just undermine international confidence in the dollar and the U.S. economy. Is printing money the right way to get the things moving again? (Watch a Fox Business discussion about the proposal)

Firing up the printing presses could be a big mistake: Buying all these assets — up to $1 trillion worth — would merely add to "the already ballooning deficit," says Ben Baden at U.S. News & World Report. And pushing down already low interest rates would further penalize people, especially retirees, who live off the interest on their savings. "One of the biggest problems facing the economy is a lack of confidence" — so maybe the Fed should be signaling that the threat of Armageddon is past and we're getting back to normal.

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