Federal Reserve’s Dollar-funding cuts show limits of its power

While world markets reacted positively by the actions taken by the Federal Reserve and other central banks, the decision to ease borrowing costs demonstrates the limited power of the Fed to fix long-term problem – the debt crisis.

Roberto Perli, a former economist in the Fed’s Division of Monetary Affairs, tells Bloomberg News the central banks are willing to respond to the short-term issues, but do so with the understanding that their actions are “not something that can fix the problem” in Europe.

Watch Bloomberg‘s interview with former Fed economist John Ryding on Fed policy and the debt crisis.