Will Fed Act Again? Sizing Up Potential Costs
Federal Reserve Chairman Ben Bernanke delivers what could be his closing argument in deliberations about launching a new bond-buying program when he speaks Friday at the central bank's Jackson Hole, Wyo., conference.</br></br>The argument comes down to weighing costs and benefits.</br></br>The Fed already has bought more than $2 trillion of Treasury and mortgage bonds to stimulate the economy. The Fed believes this drives down long-term interest rates, elevates stock and real-estate values and softens the dollar. This, Mr. Bernanke has argued, lowers financing costs, increases U.S. companies' global competitiveness and bolsters household wealth.</br></br>Most research has focused on calculating purported benefits. Critics warn about costs, but little attention has been focused on measuring them.</br></br>Here is a closer look at the other side of the ledger: