The FED has decided to finally take decisive action HERE:

On Thursday, the Fed agreed. In a significant departure from previous policy, the Fed unveiled a new asset purchasing program — an open-ended twist on previous rounds of defined quantitative easing — and announced that monetary policy will remain loose until well after economic recovery takes hold.

“To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month,” reads the Federal Open Market Committee’s statement.

More on Bernanke’s statement HERE.

There have been calls from the markets for the FED to take action for quite some time now; it has been a long time coming.  I made the case for why the FED should take action in August HERE.  But let’s be clear about this … there are two ways for us to solve the problem we are in.

#1 is through fiscal policy.  Congress controls fiscal policy but since Republicans are determined to sabotage the economy to damage the President … they aren’t passing any jobs bills but they sure are passing a lot of repeal Obama achievement bills.  They’re also passing a lot of “let’s get involved in what’s happening with women’s vagina’s bills” … but they have not passed one jobs bill that didn’t include cutting taxes for the rich or trying to force through an oil pipeline so America can export more oil around the world at a cheaper cost (instead of paying drivers).  So in this regard – Congress has failed.

#2 is through monetary policy.  The Federal Reserve controls monetary policy and it is supposed to be independent of the political process.  In July – Republicans passed an “audit the FED” bill as part of a way to intimidate the FED (more on that HERE) from taking action on the economy because the vast majority of economists agree that the FED needs to take action in order to help put the economy back on track.  And just like under Paul Volcker (in the Reagan presidency) when the FED took significant action that produced millions of jobs and a reduction in interest rates for consumers … Bernanke is taking action today.

And it is significant action.  The economy’s biggest private sector opportunity is the housing market.  The FED announced they would purchase $80 BILLION in mortgage securities by the end of the year and another $40 billion per month until they get to a point where the situation is significantly resolved.  This will help pump money in the system but it will also help clean up some of these residential foreclosure properties that are on the market dragging down everyone else’s property values.  That is also significant because the #1 source of wealth for the middle class has been equity built in a person’s home.  That IS the only major investment most middle class Americans actually make.

So this is good for a number of reasons.  And how are the Republicans responding?

Well as Greg Sargent points out this article from the Hill where Republicans are openly admitting this will help the economy but they claim that is because FED Chairman Bernanke is really trying to help Obama politically HERE:

“It really is interesting that it is happening right now before an election,” said Rep. Raul Labrador (R-Idaho). “It is going to sow some growth in the economy, and the Obama administration is going to claim credit.”

“I am shocked, just shocked, that politics are going on in this city!” Rep. Tom McClintock (R-Calif.) said sarcastically.

“They are the ones who always say they want to remain independent. So they should consider, just how independent are they when they come out, only 50 days before the election, with this?” said Rep. Scott Garrett (R-N.J.).

Other GOP lawmakers agreed that action by the Fed could open it to charges of political meddling, even if they stopped short of making those accusations themselves.

“Obviously, we are in that political season, but that’s not my bent,” said Sen. Bob Corker (R-Tenn.), who has been out front in urging the Fed to refrain from further stimulus.

Are you catching that?  Republicans are criticizing the FED for taking action to help the economy which is a big part of their job – not just controlling inflation – and they equate seeing an improving economy with helping President Obama politically.

That’s just pathetic.

Steve Benen from the Maddow Blog says HERE:

Ordinarily, elected officials at least try to maintain the pretense that their principal concern is with the public’s welfare. Members of Congress are not, in theory, supposed to root against the economy for purely partisan reasons.

But with Bernanke considering additional steps, some of these Republican lawmakers aren’t even bothering to keep up appearances. Labrador concedes he believes Fed action will “sow some growth in the economy,” but he’s upset anyway — a better economy might reflect well on the president. Garrett is resorting to almost threatening the Fed — it’s some nice independence you have there, Mr. Bernanke; it’d be a shame if something happened to it.

And the Romney campaign’s official response is this:

“The Federal Reserve’s announcement of a third round of quantitative easing is further confirmation that President Obama’s policies have not worked. After four years of stagnant growth, falling incomes, rising costs and persistently high unemployment, the American economy doesn’t need more artificial and ineffective measures. We should be creating wealth, not printing dollars.”

They even called this “another bailout” for President Obama.  The FED taking action isn’t a bailout – it is them trying to do their part to fix the economy since Congress won’t.  And the President isn’t a king so he doesn’t have the authority to create legislation and implement it without the approval of Congress.  Republicans don’t want to own any responsibility for the economy even though they’re the ones sabotaging it.

The Washington Post points out HERE:

The stock market loved it. See if you can spot the QE3 rally.

— Inflation expectations jumped only slightly. Five-year breakevens, an indication of where the market thinks inflation will go, rose to 2.22 percent:

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