Well, that was a letdown!
A lot of observers expected Federal Reserve Chairman Ben Bernanke to announce anther round of "quantitative easing" –QE3 – at the Fed's annual Jackson Hole conference. He didn't, and in combination with his previous indication that the Fed would keep interest rates at near-zero levels for the next two years, he passed the ball back to the politicians.
While I’m not sure more Fed easing would help much right now, I think that if underlying demand were stronger, I could help a lot. In other words, fiscal and monetary stimuli are partners right, but there’s a sequencing: first, fiscal needs to wake up the demand side of the economy, then easing could help amplify the impact of that demand.
Unfortunately, if the Fed is reluctant to ease now, they’d be even more so if some growth actually showed up on the scene.