Bernanke says Fed prepared to help U.S. economy

Fed Chairman Ben Bernanke reported to Congress that the Federal Reserve "will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks." I'm just not convinced they can do much.

A correction in the U.S. economy is long overdue, and I can't understand why the Fed is fighting it. A little bit of short-term suffering will strengthen our economy in the long-term, but we're so afraid of the R-word that we'll accept abnormally high inflation rates to keep it away. The greatest risk, as Bernanke himself has made clear is the return of stagflation—an economy that is stagnant or in recession coupled with high inflation rates.

Unfortunately, we seem to already be there. The Fed's solution to stagflation seems to be to deal with the stagnant economy and play the ostrich on the inflation side of things.