Questão 741301

Text 3 for questions from 35 to 37.

1 _____ In addition to her impending, and no doubt ultimately

successful, quest for Senate confirmation, Janet Yellen will

have a lot on her plate in the coming months. Now that House

4 Republicans and Senate Democrats have come to yet another

temporary agreement on the budget and debt ceiling, there still

exists another threat to the economy: The Federal Reserve’s

7 temptation to pursue an overly ambitious monetary policy

aimed at offsetting the damage to the economy arising from

poorly conducted fiscal policy. Now that President Obama’s

10 Fed Chairman nominee has been announced, the Fed needs to

shift its focus from wondering who will lead it to what its

realistic goals can be. Substantially different views are held by

13 Fed hawks and doves.

_____ The economy is still on uncertain footing, and public

frustration with the Fed is increasing, especially since the May16

taper into September-no-taper serious misstep. The Fed seems

to be making up policy as it goes along. It has become

distracted with trying to fix problems it is not well-equipped to

19 handle, including sustained lower unemployment and a faster

pace of growth than is obtainable during a period of fiscal

consolidation and weak global growth.

22 _____ The Fed’s post-financial crisis mission creep, since

2008, has fueled an unhealthy codependence between it and the

market, akin to the infamous pre-crisis “Greenspan put,”

25 whereby the Greenspan Fed was expected to — and did — step

in to support financial markets whenever there arose a threat to

rising asset markets. Markets assume the Fed can and will fix

28 any problems, such as the latest episode of Washington’s fiscal

policy bungling, that might harm the economy or depress stock

prices. Once necessary, but now dangerous, improvisations of

31 monetary policy — quantitative easing and forward guidance

in particular — have become alternately ineffective and counter

productive, as the recent tapering trauma has shown. Yellen, as

34 the primary author of the Fed’s new communication strategy,

needs to identify ways to improve the Fed’s communication

with markets and the public.

37 _____ The Fed has come a long way since its founding one

hundred years ago. Its original role was to be the lender of last

resort in a financial crisis. That role, as a temporary emergency

40 supplier of liquidity in a panic, has continued and should

continue going forward. But in the postfinancial crisis period,

the Fed has been forced to accommodate the extra cash

43 demands of households and firms confronting a world of

elevated uncertainty about the direction and conduct of

monetary and fiscal policy. That is because higher uncertainty

46 has forced firms and wealthy households to self-insure against

possible bad outcomes and to preserve optionality in the face

of unforeseen shocks and opportunities.

49 _____ Failure by the Fed to satisfy higher cash demands

worsened the Great Depression in the United States and the

deflationary lost decade in Japan. These elevated, postcrisis

52 cash needs explain why the Fed’s rapid additions to the

monetary base through quantitative easing have been followed

by disinflation, not inflation, as many have predicted. Chairman

55 Yellen will have to be vigilant to avoid tightening too soon,

while uncertainty remains high.

Makin, John H. The challenge of a lifetime. In: The international

economy. Fall 2013, p. 10-11. Available at: <http://www.internationaleconomy.

com>. Adapted. Retrieved on: March 1, 2014.

Based on the article (text 3), decide if the items are right (C) or wrong (E).

The use of “hawks and doves” (L.13) to refer to the Fed members illustrates the extent of the divergence between the two opposing groups in the organization.