Fed Buys $600 Billion in Gov't Bonds

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The Federal Reserve is trying to stimulate the economy by putting more money into the system.

However, not everyone thinks the Fed's latest move will work. Some critics warn it could lead to inflation and hurt the dollar.

It's the Fed's latest move to help the still-sluggish economy. They are buying $600 billion in government bonds in hopes of driving interest rates even lower than where they presently stand.

The goal is to encourage Americans to spend more money and stimulate companies to hire more workers.

"The best the Federal Reserve can do right now is to foster an environment where it's easy to borrow and for the consumers to use these resources to spend," said Victor Li, professor at Villanova University.

Still, buying billions in government bonds is a risky move.

Some economists fear it will hurt the already weak dollar even more and create trade problems with other countries.

Others worry the move will backfire and eventually lead to inflation. Federal Reserve Chairman Ben Bernanke calls those concerns "overstated."

The Fed's action comes on the heels of the biggest power shift in the U.S. House of Representatives in 70 years. The new Republican majority says its top concerns are the economy and jobs.

"It's pretty clear the American people want us to do something about cutting spending here in Washington, D.C. and helping to create an environment where we'll get jobs back in our country," said Rep. John Boehner, R-Ohio.

Democrats also lost a significant number of seats in the U.S. Senate and President Barack Obama said he received the message loud and clear.

"There's no doubt that people's number one concern is the economy and what they were expressing great frustration about is that we haven't made enough progress on the economy," Obama said.

"They understand that I'm the President of the United States and that my core responsibility is making sure we've got an economy that's growing," he added.

There's no guarantee the Fed's action will do anything to help the U.S. economy. Economist Mark Zandi said that even with this infusion of cash, he predicts the unemployment rate will be exactly where it is today a year from now.

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CBN News
Jennifer Wishon

Jennifer Wishon

CBN News White House Correspondent

Jennifer Wishon is the White House correspondent for CBN News based in the network’s Washington, D.C. Bureau.  Before taking over the White House beat, Jennifer covered Capitol Hill and other national news, from the economy to the 2010 oil spill in the Gulf of Mexico. Follow Jennifer on Twitter @JenniferWishon and "like" her at Facebook.com/JennWishon.