In the short term, Washington lawmakers are understandably preoccupied with trying to avoid the "fiscal cliff."
But the decisions that are likely to affect the economy's long-term health are happening not on Capitol Hill or at the White House, but at the Federal Reserve — specifically, Chairman Ben Bernanke's policy of continuing to drive down long-term interest rates until unemployment hits 6.5 percent. This tactic, called quantitative easing, could remain in place for years. But is it helping the middle-class Americans who need it most?
Unfortunately, the answer is no. Quantitative easing not only hurts older Americans on fixed incomes and those who have dutifully saved for retirement, it also frustrates younger people who can't afford to take advantage of historically low mortgage interest rates. Mainly, Bernanke's quantitative easing helps Wall Street's banks and traders, a dynamic that could be setting us up for another financial crisis as investors again seek out higher-yielding, lower-quality investments that Wall Street is only too happy to provide.