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POOR, HELPLESS BERNANKE


By Judith A. Klinghoffer (bio)

The battle over the Fed QE2 (quantitative easing) is raging. Sarah Palin is not the only one who asked Ben Bernanke to cease and desist his latest bout of money printing.

“The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment,” said the letter, signed by 23 people including Cliff Asness, who runs AQR Capital Management LLC, one of the world’s biggest hedge funds; Stanford University Professor John Taylor, creator of a monetary-policy formula used by the Fed; and Douglas Holtz-Eakin, a former Congressional Budget Office director.

Ben Bernanke embarked on QE2 to devalue the dollar to help American exports, to long term interest rates to help the housing market and to increase inflation to buoy the stock market, make Americans feel richer and spend more.

Alas, the global economy refuse to cooperate. Bond vigilantes are gunning for Ireland, the Euro teeters and the dollar rises. Stocks retreat on Asian inflation, Euro debt fears. And long term interest rates are rising instead of declining.

Poor Bernanke, the American economy is tied to the global economy and the world economy refuses to march to the beat of his drum.

May I just add that it is absurd not to include food and fuel in the inflation rate. It does not feel like zero inflation to me. Not when I have to pay 90 cents for a bagel.

For more, see my HNN blog Deja Vu

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Posted by Judith A. Klinghoffer on November 16th, 2010
Permanent link: POOR, HELPLESS BERNANKE 

 

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