The Fed as a growth driver
Does the Obama administration care more about creating wealth or redistributing wealth? Maybe the strategy is for the WH to worry about the latter and let the Fed take care of the former. Scott Grannis, the Calfia Beach Pundit, makes an interesting observation (bold is mine):
Many, including most Fed governors, fear that an early reversal of quantitative easing, which would undoubtedly require higher short-term interest rates, might jeopardize the economy’s nascent recovery. I think it makes more sense to worry about what might happen if the Fed waits too long. I seriously doubt that this economy is so fragile that it can’t support short-term interest rates of at least 2-3%. I really worry that an inflationary error from the Fed at this point, which would weaken the dollar and undermine confidence in the U.S. economy, would do far more damage. Far better to pursue a path that builds confidence in the strength of the dollar, rather than gambling everything to boost the economy. Monetary policy was never designed to be a tool for raising or lowering the economy’s growth rate.