Money in the Morning

FED STIMULUS -- Congress is not the only one having a hard time figuring out what to do with the economy. The debate is raging over whether the Fed should loosen up even more money to provide an economic boost. The pro- and anti-monetary stimulus camps aren’t falling neatly along ideological lines; Ben Bernanke is pushing the Fed to go along with more quantitative easing, while prominent liberal economists not named Paul Krugman are questioning whether monetary stimulus would even help.

Bernanke circles the wagons. Bloomberg hed: "Bernanke Counters Fed Unity Doubt as Regional Chiefs Echo Views" ... "In one week, New York Fed President William Dudley, the Boston Fed’s Eric Rosengren and Chicago’s Charles Evans advocated further Fed action. Bernanke himself said Oct. 4 that restarting large-scale asset purchases would probably spur growth...

“Causing Chaos” -- Nobel Prize-winning economist Joseph Stiglitz said that the loose money policy isn’t helping at home and is hurting countries abroad. Key quote: "The irony is that the Fed is creating all this liquidity with the hope that it will revive the American economy. ... It's doing nothing for the American economy, but it's causing chaos over the rest of the world. It's a very strange policy that they are pursuing." Stiglitz wants fiscal stimulus. Reuters:

Both Stiglitz and former Labor Secretary Robert Reich are warning about inflation, putting them at odds with fellow liberal economist Paul Krugman, notes TheMoneyIllusion’s Scott Sumner.

Krugman, at EPI’s fiscal forum Tuesday, said the U.S. recovery is so tepid that we’ll come to envy Japan’s lost decade, while Goldman Sachs’ Jan Hatzius said any Fed stimulus will help but needs to be bigger than what’s being mulled. Ezra Klein:

Meanwhile... markets are responding to the central banks. They approached a 5-month high Tuesday on reports of Fed and Bank of Japan stimulus. Reuters:

PELOSI MOVES ON FORECLOSURES -- The Speaker and California House Dems call on the Obama administration to freeze foreclosures and investigate lender practices. In a letter to the Justice Department, the House members write that ““it is time that banks are held accountable for their practices.” NYT:

Treasury touts TARP deficit impact -- Bailouts under Obama will cost $29 billion, far less than the $350 billion once predicted by the Congressional Budget Office, according to a Treasury Department report. The number is much lower thanks to repayments by banks, while auto bailouts and the administration’s mortgage refinance program pushed the cost up. NYT:

States looking to cut public worker pensions because of budget shortfalls. WaPo:

Economic indicators not so bad -- “A good, strong” report on the service sector is helping calm fears about an economic slowdown. The sector expanded and started hiring in September after shedding jobs in August. WSJ:

Forecasters expect holiday sales to be up by at least 2 percent, better than the 1 percent increase of a year ago. Reuters:

But... Retailers expect only slight increase in holiday hiring compared to last year. NYT:

Warren Buffett says Wall Street is like a church that runs a casino on the side.

The Onion does business journalism. Key graf: “An analyst from Citigroup or Citibank announced on Monday that the Federal Reserve System is doing too much, while the Fed has failed to accomplish its goals to increase inflation or interest, which are different things. In addition, he was critical of the Fed's efforts to regulate the Bernanke.”

Funny because it’s true, writes Derek Thompson.

The Most Valuable Blogs in America: Top 3 are Gawker, HuffPo and Drudge. 24/7 Wall St. and The Atlantic:

Treasury looking for IMF to pressure China on currency at this weekend’s IMF/World Bank meetings in Washington. NYT: