Does Anyone Think Bernanke's New Plan Can Fix the Economy? – Yahoo! News.

Federal Reserve chief Ben Bernanke is sick of sitting on the sidelines and on Thursday announced an aggressive new plan to boost the economic recovery by pushing down longer-term interest rates. Econ pundits have been awaiting today’s announcement for weeks following Bernanke’s warnings that the country’s “grave” unemployment rate is untenable. But until now, nobody knew how much the Fed would be willing to spend on a new bond-buying program (the answer: $40 billion per month for an open-ended period of time). Does the new scheme have a shot at working? Here’s what experts are saying:

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This isn’t going to make a difference, says Wilmer Stith, manager of the Wilmington Broad Market Bond Fund. “QE3, QE4 or QE5 may not do much to boost the economy. The bigger issues are concerns about the election, regulation and the fiscal cliff,” he said, noting that congressional action is the only thing that can save the recovery. “If we fall off the fiscal cliff, we’d likely enter another recession.”

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Not true: It could instill much-need confidence, says Reuters blogger Felix Salmon. “The Fed is now trying to boost the economy by promising to continue buying bonds, in a zero-interest-rate environment, for many, many quarters to come. It’s the promise, rather than the purchases themselves, which is the main difference between QE3 and its predecessors,” he says. “The Fed’s balance sheet is a powerful tool to use — but its vocal chords might be even more powerful still.”

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It’s better than doing nothing, says CNN Money columnist

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