Stein is wrong in assuming that the Fed has specific monetary policy tools that can surgically attack bubbles.
Bernanke also mentioned other monetary policy tools available to the Fed.
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In fact, the Fed was established as a result of the Panic of 1907 and the discount mechanism and rate were the only tools of monetary policy given to the Fed in the Federal Reserve Act.
Overall, the Federal Reserve has many effective tools to tighten monetary policy when the economic outlook requires us to do so.
The government has been fighting inflation with a range of policy tools, including the usual monetary tightening.
Obviously the tools that it has on monetary policy, given interest rates, are not -- their options are not great.
Winmill points at the debt ceiling debate as one of the factors helping to push the price of gold higher, recognizing that along with ultra-loose monetary policy, the government is running out of tools to bring down unemployment rates that have crept past 9%.
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Finally, the head of the Federal Reserve sought to reassure markets that his institution had all the tools at hand to rein back accommodative monetary policy when needed.
Should the U.S. and Europe fall into a recession, which would be unlikely with more monetary stimulus, Mantega said the country had plenty of policy tools it could use to combat a double dip.
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He indicated policy-setters still have tools they can use to provide further monetary stimulus, but nevertheless he did not offer details or signal when they might be activated.
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