Alarmed by the chronically weak US economy, the Federal Reserve launched an aggressive new effort Thursday to boost the stock market and make borrowing cheaper for years to come.

And it made clear it won't stop there and is ready to try other stimulative measures if hiring doesn't pick up.

Stock prices rocketed up in approval. But economists said the Fed's plans to buy mortgage bonds for as long as it deems necessary and to keep interest rates at record lows until mid-2015 -- six months longer than previously planned -- might provide little benefit to the economy.

Chairman Ben Bernanke himself cautioned that the Fed's actions are no panacea for slow growth and high unemployment, and said the economy will probably need help even after the recovery strengthens.

"The idea is to quicken the recovery," Bernanke said at a news conference after the Fed lowered its outlook for growth this year.

As part of its bold and open-ended plan, the Fed said it would spend $40 billion a month to buy mortgage bonds to make home buying more affordable. That will be the third round of bond-buying in an effort to spur the economy, and the Fed left open the possibility of taking other steps to encourage borrowing and financial risk-taking.

Stock prices rose steadily after the Fed's announcement at 12:30 p.m. Eastern time. The Dow Jones industrial average closed up more than 200 points, coming within 625 points -- or 4.6 percent -- of its all-time high. Other stock averages also surged.

Benchmarks in Asia also rallied on the news. Japan's Nikkei 225 index gained 1.5 percent in early trading. Hong Kong's Hang Seng Index climbed 2.5 percent to its highest level since early May.

The Fed's policy committee announced the actions after its two-day meeting. The moves pointed to how sluggish the US and global economies remain more than three years after the Great Recession ended.

Thursday's announcement marked the Fed's latest dramatic intervention since the financial crisis erupted in 2008 and the recession sent unemployment into double digits. The Fed cut its benchmark short-term rate to near zero and has kept it there for nearly four years. And it's bought more than $2 trillion in Treasurys and mortgage bonds to try to drive down long-term rates.

Yet for all that, the US economy is still struggling. The unemployment rate is 8.1 percent. And the Fed estimated Thursday that the rate will fall no lower than 7.6 percent in 2013.

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Editor's Note: So, let's take an honest look at this. The Fed used Keynesian economic principles in 2008 in a massive bond buy that was supposed to stimulate the economy. The result? The stock markets did well, the indicators doing very well today. But unemployment is still above 8% and the Labor Participation Rate is at a dismal 63.5%. So, if it didn't work then why would it work now? Bottom lines: 1) The markets have ceased being an accurate indicator of the nation's fiscal health because Wall Street knows it will get bailed out if it hits a wall executing overly risky measures; 2) The reason hiring is stalled is because of ever-expanding and intrusive government intervention into the private sector. Do we need regulations in private sector business? Yes, common sense and reasonable regulations. Should government feel it has a right to regulate? No, because it does not. I needs to be reigned in by the legislative process.


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