By John T. Bennett - 09/18/11 08:16 PM EDT
"The Fed has a big problem right now as to whether there's anything else they can do to help the economy along," Alice Rivlin, White House budget chief under President Bill Clinton said.
"The one thing they're talking about now is can they rebalance their portfolio, as it were, to roll off the short term bonds as they come due, and invest in long-term bonds," she said. "That's called 'the twist.' And all it would mean is they use the powers that they have, because they have a very big portfolio, to put a little downward pressure on long-term interest rates."
Douglas Holtz-Eakin, a former Congressional Budget Office director and adviser to Sen. John McCain's (R-Ariz.) 2008 presidential campaign, agreed.
"There's really not much the Fed can do to push the economy along faster," Holtz-Eakin said. "It is still well positioned if something bad happens. You worry about Europe. It can step in if things start to spill over to the U.S., something goes wrong here. They're well positioned for that."