That’s the only conclusion I can draw after today’s announcement by the FOMC. The group that decides on interest rates used a butter knife to tackle a stagnant economic disorder that requires a broadsword.

The Atlantic Wire had the details:

In a modest bid to kickstart the economy, Fed chief Ben Bernanke is expanding a Federal Reserve program called “Operation Twist,” which is aimed at reducing unemployment by lowering interest rates, by selling $267 billion worth of short-term bonds to purchase longer-term debt. The program was scheduled to end this month but will be extended now to the end of the year. Markets slumped following the news, as some investors hoped that Bernanke would do more to boost the economy such as a third round of quantitative easing.  Bloomberg NewsThe Wall Street Journal, and Reuters all have good initial coverage.

By contrast, Yglesias cried foul.

Money quote:

With 2 percent inflation and 8 percent unemployment, you can’t curb joblessness unless you’re willing to tolerate some inflation. If millions of people get jobs, get their own places to live, start commuting, etc., the prices of some stuff will go up. If you want to keep prices low, you have to condemn us to years more of mass unemployment.

Bernanke and the FOMC obviously see price controls as a more important issue than mass unemployment. I think that’s foolish, but I also like cheap goods and services, so I am conflicted.