But most Americans are feeling the difference, in part because these benefits were surprisingly low. The latest estimates of economists, in fact, suggest that the pace of the recovery of the financial crisis has been reported since November, when the Fed began to buy Treasury securities to push $ private investments that create jobs for $ 600 billion.
As the development of policies of the Fed Board prepares to meet Tuesday and Wednesday - after the President of the Fed, Ben Bernanke s., will hold a press conference for the first time explain its decisions to the public - a wide range of economists say that the disappointing results show the limits of the capacity of the Central Bank to lift the nation's economic malaise.
"It is good to stop the fall, but for actually turning things around and behind the wheel of recovery, I just do not think that monetary policy has this power, said Mark Thoma, a Professor of Economics at the University of Oregon."referring specifically to the bond purchase program.
Mr. Bernanke and his supporters say that purchases have improved conditions economic, all but erasing fears of deflation, a pattern of decline in prices that can delay purchases and growth of stall. Inflation, which is beneficial in moderation, climbed more closely to healthy levels since the Fed began to buy bonds.
"These actions had the expected market effects and are thus providing significant support to the creation of jobs and the economy," Mr. Bernanke said in a speech in February, an argument, he repeated frequently.
But rest of slow growth, jobs remain rare, and with purchases of debt should be completed in June, the Fed must now decide what comes next.
The Fed has generally encourages growth by pushing down interest rates. Normally, it reduces the rate of interest, in the short term and the effects spread to other types of borrowing as the obligations of companies and mortgage loans. But with some short-term rates hovering near zero since December 2008, the Fed has tried to attack the long-term rates directly by entering the market and offering to accept lower returns.
The Fed has limited the program to 600 billion under considerable political pressure. Although this seems a lot of money, purchases have not yet followed the pace of issuance of the Government of the new debt, therefore in a sense, the effort has amounted to walk on water. And a growing number of research suggests that the Fed could have a greater impact by spending more money on a wider range of debt, such as mortgage bonds, as he did at the outset.
A vocal group of critics, meanwhile, argues that the Fed has already made too much, having amassed a portfolio more $ 2 billion that could hinder the ability of the Central Bank to raise interest rates to curb inflation. Some of these critics consider the increase in the price of oil and other products as precursors to larger price increases.
"I was not a big fan of it in the first place," said Charles i. Plosser, President of the Philadelphia Federal Reserve Bank and one of the ten members of the Council of the Fed decision. "I thought he was going to have much impact, and it complicates the exit strategy." And what we have seen has not changed my mind. ?
Decision of the Fed to buy bonds, known as quantitative easing, imitated the Central Bank of the Japan, which has begun to buy bonds in 2001 to break a deflationary cycle.
The U.S. version has worked well in the beginning. November 2008 to March 2010, the Fed buys more than 1.7 billion in mortgage loans and bonds, holding mortgage rates and reduce the cost of borrowing for companies highly by half a percentage point, according to several studies. It is an annual saving of $ 5 million on each borrowed $ 1 billion.
As the economy spitting last summer, Mr. Bernanke said in a speech to the August that the Fed would start a second series of quantitative easing, soon nicknamed EQ 2. The initial reaction was the same: rising asset prices, interest rates fell and the dollar declined in value.
But, as smaller and only concentrated on the Treasury bills, there also was a problem of diminishing returns. The first round of purchases reduced the cost of borrowing by persuading the fickle investors to accept lower risk premia. With markets closer to normal, Mr. Bernanke has warned in his speech of August that it was not clear that the Fed would have a comparable success to convince investors to accept lower rates of return.
"These purchases seem likely to have their greatest effect during periods of economic and financial stress", he said.
The Fed said that expectations have been tempered by these realities, but nevertheless lowered the programme performance of the long-term bonds to the Treasury Board by about 0.2 percentage rate investors would be required in the absence of the Fed. It is the same impact that the Central Bank could have achieved by lowering its benchmark 0.75 percentage point, which normally would be an aggressive move.
But some economists say that the new program had a more limited impact on the economy than would a traditional cut of interest rates in the short term. The Fed has predicted that investors would be forced to buy other kinds of debt, the reduction of rates for other borrowers. But the supply of bonds available to investors has increased since November, as the issuance of new debt exceeded the Fed purchases.
A study published in February found that the interest rate has decreased, but only for companies whose page top credit ratings. "Rates which are very relevant to households and companies - mortgage rates and lower-quality corporate bonds rates — have been largely affected by the policy," writes Arvind Krishnamurthy and Annette Vissing-Jorgensen, both professors of finance at Northwestern University.
Another indication of its success limited: debt has not increased significantly, suggesting that companies - who are sitting on piles of cash Records - do not yet see opportunities for new investments. Until they do, some economists argue that the Fed pushing on a string.
"What has it done?". "He relaxed credit conditions, it has pumped up the stock market, he has removed the dollar," said Mickey Levy, Chief Economist of Bank of America. "But the Fed think as the purchase of Treasury bills and bloating its balance sheet is really going to create permanent employment increases."
