Federal Reserve Chairman Ben Bernanke certainly seems to have figured out how to dole out bits and pieces of what markets seem to want to hear, namely, that the central bank is ready, willing, and able to crank up the printing press in order to keep asset prices aloft under the broad cover of fighting deflation. Today’s speech at the Fed confab in Jackson Hole, Wyoming offers another good example.

Notwithstanding the fact that the policy rate is near its zero lower bound, the Federal Reserve retains a number of tools and strategies for providing additional stimulus. I will focus here on three that have been part of recent staff analyses and discussion at FOMC meetings: (1) conducting additional purchases of longer-term securities, (2) modifying the Committee’s communication, and (3) reducing the interest paid on excess reserves. I will also comment on a fourth strategy, proposed by several economists–namely, that the FOMC increase its inflation goals.
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Falling into deflation is not a significant risk for the United States at this time, but that is true in part because the public understands that the Federal Reserve will be vigilant and proactive in addressing significant further disinflation. It is worthwhile to note that, if deflation risks were to increase, the benefit-cost tradeoffs of some of our policy tools could become significantly more favorable.

Second, regardless of the risks of deflation, the FOMC will do all that it can to ensure continuation of the economic recovery. Consistent with our mandate, the Federal Reserve is committed to promoting growth in employment and reducing resource slack more generally.

That last part in bold is probably what has buyers of everything but Treasuries bidding prices higher since, as the $2.3 trillion Fed balance sheet has ably demonstrated, the phrase “all that it can” means trillions more dollars being summoned for the greater good.