Debate continues over how to keep economy going

By The Miami Herald  • 

Accommodative or restrictive: Which is the better strategy to ensure that the U.S. economy keeps expanding?

Both tactics have been profitable for investors even as they seem to be at odds. And both will be on display this week on Capitol Hill and Wall Street.

Federal Reserve Chairman Ben Bernanke will present the accommodative case to two congressional committees on Wednesday and Thursday. His testimony is part of the twice-a-year economic update Congress demands from the central bank. Republicans on those committees probably will defend the restrictive case.

Bernanke’s agency has been pushing money into the economy by keeping its key interest rate near zero and buying billions of dollars of government- and mortgage-backed bonds. Meanwhile, congressional Republicans have succeeded in pulling government money out of the economy with the budget sequestration that went into effect in March.

Last week, Bernanke reassured investors worried about the Federal Reserve reducing its accommodations. Instead of pulling back, he pledged to continue his strategy “for the foreseeable future.” That helped push the indexes of big stocks to record highs.