A final worry involves a future financial crisis. The most obvious candidate is the bond market, where a "bubble" is often said to have formed. Bond prices have soared, reflecting the Fed's huge purchases and heavy demand from private investors seeking a "safe haven" from erratic stocks. But the more prices rise, the greater the danger that they've reached artificial levels and are vulnerable to a steep sell-off. Households and financial institutions (pensions, insurance companies) would suffer large losses. Any panic might spread to other markets.
It's seductive to think the Fed can engineer the desired mix of unemployment and inflation. And the motivation is powerful. About 5 million Americans have been jobless for six months or more. The present job market represents, as Bernanke said, "an enormous waste of human and economic potential." But the Fed is bumping against the limits of its powers. Are potential short-term benefits worth the long-term risks? It's a close call.
Robert J. Samuelson is a Washington Post columnist.
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