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By John W. Schoen

With the U.S. economy slowing down again, this is no time for Federal Reserve policy makers to tighten the central bank's $85-billion-a-month money hose.

That’s, in essence, what central bank policy makers said Wednesday when they voted to stick with their four-year-old policy of pumping cash into an economy still struggling to recover from the biggest financial collapse in 80 years.

The central bank’s interest rate policy committee “continues to see downside risks to the economic outlook,” according to a statement released Wednesday after its regular meeting.

To keep fresh cash flowing into the economy, the Fed will continue to buy some $85 billion worth of bonds backed by the government and private mortgages.

Since the housing bust, demand for mortgage bonds from private investors has all but dried up, leaving the Fed as something of a lender of last resort supporting the housing recovery.

Though prices are rising and demand strengthening in some regional housing markets, a series of recent monthly data have reinforced the Fed’s view that the economy still needs all the help it can get.

The job market remains weak, according to a Wednesday tally of just 119,000 new jobs in April by payroll processor ADP. That’s barely enough to keep up with population growth.

Separate readings Wednesday showed a marked slowdown in manufacturing and construction.

Nearly four years after the end of the Great Recession brought on by the painful hangover of the 2000s housing bubble, a wobbly U.S. economy is struggling to maintain a weak growth pace of about 2 percent a year. American consumers, companies and government at all levels continue to work their way out from under that historic borrowing spree.

Though consumers have paid down a big pile of debt, millions of homeowners still owe lenders more than their house is worth. Slack wage growth has forced many households to borrow or to tap into savings to pay the bills. (The latest report on gross domestic product showed a big savings drawdown in the first quarter, a worrisome sign that consumers are having trouble making ends meet.)

Banks and large companies have paid down or written off much of the “leverage” that contributed to the 2008 crash and are now sitting on piles of cash. But despite the Fed’s efforts to supply even more cash, bank lending and corporate investment in new hiring and equipment has been painfully sluggish.

From Capitol Hill to statehouses and city halls, governments are tightening their belts to pay off debt and close budget gaps. Since federal budget cuts known as the sequester took effect March 1, cutbacks in government spending and staff have begun putting yet another major damper on growth.

And widespread concern about Washington’s ongoing failure to agree on a budget, overhaul the bloated tax code or overhaul Social Security and Medicare are holding back business and consumer confidence.

"The economy has yet to reach escape velocity and there is very little reason to think that Washington will stop putting up roadblocks to growth,” said Joel Naroff, chief economist at Naroff Economic Advisors. “The Fed is not likely to change direction until the members are confident the economic rocket can reach orbit.”

Fed officials Wednesday said that to offset the negative of government spending cuts, the interest rate committee plans to keep its easy-money policy in place indefinitely.

Among the many unprecedented policies in the central bank's 100-year history, Fed officials have promised to keep interest rates low until the jobless rate hits 6.5 percent – a substantial improvement from the current 7.6 percent rate. Based on the current pace of hiring, Fed officials and private economists predict that could take years.

Some Fed critics – and a few policy makers themselves – aren’t convinced the central bank’s aggressive strategy of flooding the system with cash is such a good idea. One big worry is that the $3.7 trillion of new money created since 2008 will spark ruinous inflation or another financial bubble – along with a repeat of the disastrous bust of 2008.

So far, rising prices in the stock and housing markets don’t appear to have gotten ahead of themselves. The added wealth is also propping up consumer spending while wages are flat or falling.

And there is little sign that central bankers need to worry about inflation. Based on the indicator watched most closely by the Fed, prices have risen just 1.1 percent in the past 12 months.

If anything, central bankers are more concerned about the opposite problem – the possible threat of a deflationary cycle that could stop the economy in its tracks as businesses and consumers postpone investing and spending while waiting for prices to fall further.

At some point, central bankers will have to figure out how to reverse their cheap-money course, let interest rates gradually rise again and begin whittling down the mountain of debt now accumulating in the Fed’s vaults.

The hope is that the economy will have recovered enough strength by then to offset the drag on growth that higher rates usually create. But it could be years before Fed policy makers start working on that “exit strategy.”

Fed chairman Ben Bernanke’s second term expiring at year-end, and many Fed observers believe he won't be re-appointed for another term. That would leave that task of unwinding the current policy to his successor.