17 Mar 2011

The Fed Is Driving Me Crazy

Federal Reserve 4 Comments

And not how you think. I mean because I have to read articles that defend Bernanke like this (HT2 LRC):

Bernanke in Testimony Can Prove to Ron Paul How QE2 Works in Free Markets

The next time Federal Reserve Chairman Ben S. Bernanke appears before Congress, here are a few visual aids he can use to show critics that quantitative easing is working:

The Standard & Poor’s 500 Index of stocks has climbed 18 percent since he said Aug. 27 that additional asset purchases might be warranted.

The risk premium on high-yield, high-risk bonds has narrowed to 5.16 percentage points from 6.81 percentage points, Bank of America Merrill Lynch index data show.

Inflation expectations have jumped by 44.4 percent…

So much for 2008 Republican vice-presidential candidate Sarah Palin’s assertion that the “dangerous experiment” wouldn’t “magically fix economic problems.”

Quantitative easing “was a key factor in taking deflation risk off the table,” said Peter Hooper, chief economist at Deutsche Bank Securities Inc. in New York. “It certainly helped bolster longer-term inflation expectations…”

The Fed’s Nov. 3 decision to buy $600 billion of Treasury securities through June…sparked the harshest political backlash against the central bank in three decades, with Republican lawmakers warning the additional stimulus risked causing a surge in prices. So far, they were wrong.

4 Responses to “The Fed Is Driving Me Crazy”

  1. Dan says:

    That’s painful to read

  2. RG says:

    What floats through my mind as I read that excerpt is any Schwarzeneggar movie (except Predator which is kid of a reversal and also why it’s his best) where he has to hack his way through all the henchmen, with just a couple scratches, to reach the main thug before taking out the main villian.

    I always thought to myself, how does the villian acquire such a large amount of personnel and why are they always really bad at their jobs? But when you’re unscrupulously churning out a fortune (or priniting up fistfulls of cash) I imagine you bring in and keep those willing to take their payments without many questions asked even though they’re probably not going to be very good at defending your behavior even though they inflict insignificant flesh wounds from time to time.

  3. Captain_Freedom says:

    Do the spin doctors get all their information from the same source or something?


    Their articles are so similar, Caroline Salas and Roger Nachman could be the same person.

  4. Jon O. says:

    I guess one needs a more nuanced view of free-markets to understand how intervention with and manipulation of money supply, interest rates, and asset prices by the government “work with” the free-market.

    Everything worked out great if you ignore the labor participation rate, raw imput/import prices, margin compression, continuing collapse in the shadown banking system, weakness in private credit demand, weakness in housing, lack of real returns for those on fixed incomes, the deficit, the current account, avg. duration/size of the public debt, and the shift in implied libor rates going foward. Besides the major (unfixed) structural and (newly created) cyclical issues we are good to go!