Bernanke did himself and the American people a great disservice tonight. He said that he was 100% certain that “He” could contain the consequences of his policy of quantitative easing. No person in a position of responsibility should make such bold statements. There is always risk.
Bernanke’s TV fireside chat was a bomb as a result of this gross misstatement of the risks of the Fed's monetary policy. There is a “zero” chance that QE will end badly? Please, that is idiotic and insulting. The thousands of people around the world who have stood up and said it is voodoo economics are all wrong? Talk about hubris.
I’m not going to write the article documenting the Fed’s prior mistakes. To suggest that they will not err this time around is too much of a stretch. Ben should have acknowledged that there is risk. That he and his mates don’t sleep at night knowing they have crossed a line to the dark side of monetary policy. I wanted to see a humble Ben. One who said that he is facing a daunting task, one where the risks of action and inaction are substantial. But he chose to brush it all off. He is either blind to history (that he claims to study), he is lying or he made a boastful statement of his powers that are totally unjustified.
History is unkind to those who look into the future with myopic eyes and see the outcome of an uncertain world as 100% certain. Ben made some history tonight, but we won’t know about it for a few more years. Then we will be looking at Ben’s video with both a laugh and a cry.
For the record. Ben is not printing money. He is monetizing debt. He is, in effect, financing the current deficit of the government. He is actively intervening in the bond market. There is no limit that has been established for this policy. Ben said tonight he would do more if it suits him. Monetizing debt is a desperate act. That we are doing it will make us desperate.
In my opinion QE is not necessary and exposes the global economy to a variety of risks. There will be little benefit to the US economy. We will have a long-term headache as a result. Ben’s persistence with QE at this juncture looks like a gamble by a desperate man. He was slapped down of late and made the unusual (unprecedented?) step of going on nationwide TV to say that all is well and not to worry.
I’m worried. I think the market for the dollar and gold will read it as I do.
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