NEW YORK — Federal Reserve Chairman Ben Bernanke’s plan to rejuvenate the economy by having the Fed buy $600 billion in Treasury bonds is coming under attack from fellow Republican economists.
They argue that pumping many more dollars into the economy could eventually trigger inflation and weaken the dollar too much. The economists are making their case in a letter to Bernanke and in ads to run this week in the Wall Street Journal and the New York Times.
The Treasury-bond purchases “risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment,” the economists wrote in their letter.
At the same time, their criticism risks pushing the Fed deeper into Washington politics, where many fear the central bank’s independence could be compromised.
The economists express doubts that the program will help the Fed achieve a primary goal: reducing unemployment, now stuck at a high 9.6 percent rate. And they think it will inject new risks into the global economy.
Bernanke, a Republican who was President George W. Bush’s top economist before taking over the Fed in 2006, has signaled frustration over the still-sluggish economy and persistently high unemployment. Even though the recession technically has ended, the unemployment rate has been stuck at 9.5 percent or higher for more than a year.
In announcing the bond- purchase program Nov. 3, the Fed said it could lower long- term interest rates and stimulate stronger economic growth. Bernanke has said he thinks lower-interest loans would lead companies to borrow and expand.
