Washington's latest jobs program isn't coming out of Congress or the White House. America's political branches are in gridlock. It's coming out of the Federal Reserve.

The Fed's jobs program is designed to keep interest rates low by pumping even more money into the economy ("quantitative easing" in Fed speak). The Fed will buy up lots of Treasury bills and other long-term debt to reduce long-term interest rates. The Fed believes low long-term rates will generate more jobs because companies will expand, exports will increase and consumers will refinance their homes.

Unfortunately, the Fed's jobs program won't work. It will just pump up another speculative bubble.

Lower interest rates would boost the economy under normal circumstances when consumers aren't deeply in debt. But Americans are still beaten down by the Great Recession. Without a real jobs program that puts them back to work, cheaper money doesn't help.

The Fed's ersatz jobs program is based on three incorrect assumptions.

The first is that lower rates will spur more businesses to expand capacity and hire workers. But lower rates won't spur more businesses to hire when consumers aren't buying.

American businesses aren't hard up for money. Big businesses are sitting on $1.8 trillion of cash. They're not using the cash to add jobs because they know American consumers can't buy more goods and services. They're still loaded down with debt and afraid of losing their jobs.

Businesses are using the cash instead to expand capacity abroad, merge with or acquire other companies and invest in labor-replacing technologies. If the Fed allows big businesses to get even cheaper money, they'll do even more of the same.

These strategies are boosting profits. But they're not boosting U.S. employment. If anything, they're reducing the need for American workers.

Second, the Fed believes lower rates will push the dollar downward and make American exports more competitive, and more exports will create more U.S. jobs.

But the dollar's drop won't spur more American exports. It will spur other nations to reduce the value of their currencies instead. No other nation wants to lose export shares to the United States. This would only increase their unemployment.

The global economy is already on the verge of such a currency war. In light of the dollar's recent drop, a half dozen other major trading nations have been pushing their currencies downward. Last week, financial officials of the 20 major industrialized nations agreed to avoid competitive currency devaluations.

Third, the Fed believes lower interest rates will put more money into consumers' pockets because it will spur more Americans to refinance their homes. This would give them more cash to spend and thereby stimulate more jobs.

But most Americans won't be able to refinance their homes because banks are now required to follow strict lending standards. Banks won't lend to families whose overall incomes have dropped, who are still burdened with high debts, or who owe more on their homes than the homes are worth. This means most families won't qualify for refinancing.

So if the Fed's easy money won't create more jobs and won't find its way into the pockets of most Americans, where will the money go? Into another stock-market bubble.

The bubble has already started. Stocks are up even though the rest of the economy is still down because the Fed has already been keeping interest rates near zero. Its new effort to reduce long-term rates will inflate the bubble faster.

With interest rates so low, investors can't get much of a return from their loans. So they're shifting more of their money into stocks.

Meanwhile, companies are borrowing money at near-zero rates in order to buy back more shares of their own stock. And Wall Street is using the cheap money to make more bets in the stock market.

So the stock market is already rising on the hot air of cheap money. As the Fed floods the economy with more money, the stock market bubble will expand.

There's a lesson here. When our elected representatives can't and won't come up with a real jobs program, the Fed feels pressed to come up with a fake one. But a fake jobs program doesn't create jobs. It only creates a financial bubble.

And we know what happens when financial bubbles get too big.