For most-hurting Americans, Fed remedies limited In the most difficult economy in a generation, middle-income and poor Americans are hurting the worst. Congress is tied in knots, barely able to pass even the most basic measures to help. That has put pressure on the one arm of government with the power and the flexibility to try to boost ordinary Americans" fortunes: the Federal Reserve. But the limited policies the Fed has at its disposal mostly put money in the hands of the affluent, at least through their direct effects. The affluent, in turn, are less likely than most to spend that money in the wider economy. That may be a key reason that a series of dramatic steps by the central bank has not done more to raise living standards for American workers. The Fed has aimed to strengthen growth and lower joblessness by pumping cash into the economy, buying vast amounts of government bonds using newly printed money. The bond purchases have pushed up the stock market, in which the wealthy are much more heavily invested than the poor and the middle class. The bond purchases also have helped lower mortgage rates, and the affluent are more likely to buy a home - and have bigger homes to refinance - than those of lesser means. At the same time, Fed bond purchases tend to weaken the dollar, driving up the cost of imported oil - and the poor spend a higher proportion of their incomes on gasoline than the rich. If Fed policies succeed in invigorating the economy, millions of people looking for work - or worried about losing it - would be among the big winners, and leaders of the central bank see a need to do whatever they can to try to get the overall economy back on track. Obstacles to success But the success of those policies are limited by their very nature. The Fed, as a central bank, largely acts through bond market purchases and interest rate changes that do not equally affect segments of society. A wide range of research shows that the poorer people are, the more likely they are to spend any new money they get, which keeps it circulating through the economy. Wealthier people are more likely to save it, which does little to foster economic activity. In 2010, middle-income families - those making about $46,000 a year - spent 91 percent of their after-tax income. The upper 20 percent, those who make an average of $157,000, spent 62 percent. "The gains in the stock market have gone to families that are more likely to save them than would be the case if the same money went to families that are living hand to mouth," said Karen Dynan, a senior fellow at the Brookings Institution who formerly studied household finances at the Fed. Tight lending standards have meant that . . . the homeowners most able to refinance into lower-rate mortgage loans right now are also the most likely to pocket their savings rather than spend them. In trying to boost the economy through bond purchases, the Fed is using one of the few tools it has left. But Fed leaders have acknowledged that the program's effectiveness is uncertain and have vigorously debated the risks involved. The technique that the central bank traditionally prefers to goose economic growth - reducing interest rates - is no longer an option because rates are already near zero.