Our text today is a phrase commonly uttered by:
Alcoholics, Pyromaniacs, Philanderers, and the US Fed Chairman?
Don't get me wrong, I think Bernanke and the Fed have done a great job addressing the credit freeze by expanding liquidity, taking shakier paper for collateral, opening the discount window wider, and yes even by having a hand in the Bear-Sterns sale (though this last achievement I agree is debatable).
However, the rate-cutting is just plain out of hand. The dollar is shot, commodity prices soaring, inflation is over 4%, the markets have been calmed, but the Fed is gonna cut the funds rate again.
Why?
"Hi, I'm Ben and I'm addicted to negative short term interest rates"? probably not.
I honestly think this is another paradoxical case of the Fed caving in to political pressure in order to save its vaunted independence.
Well said. And let's stop pointing fingers at emerging markets, OPEC, food shortages etc. for higher prices and depreciating dollar. Repeat after me: "inflation is always and everywhere..."
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