The Fed, QE2 and Sarah Palin’s Common Sense
There are several articles out this weekend discussing the policies of Ben Bernacke and the The Federal Reserve. All of this is in anticipation of Bernacke’s press conference this coming week - on Wednesday.
One the most comprehensive articles is posted at Business Insider, authored by Dian L. Chu.
An excerpt from Why The Fed Must End QE2 On April 27th:
When Transitory Turns Self-Fulfilling
The problem for the Fed is that this goes beyond current inflationary effects in the economy, but future expectations of inflation in the economy. And none of these are transitory in nature once they get embedded in the psyche of investors and consumers. The only way they were doused in 2008 when they were at these exact levels was a near historic crash in the financial and housing markets.
Absent of some similarly extreme deflationary event, inflation and expectations of inflation are only going to feed on themselves and become even more firmly entrenched in the economy, negatively reinforcing investors and consumer’s asset allocation and spending habits.
This all becomes self fulfilling in nature, and the real nasty part about inflation is if you don`t head it off early, once it gets even a little momentum, it becomes much more difficult to control and manage. This is where the fed is right now; they are at the cusp of losing control of their handle on inflation with their incredibly dovish stance towards inflation.
Read the entire article at Business Insider…
In addition to this, the NY Sun has posted an editorial piece asking how it is that Sarah Palin was able to predict the ineffectiveness of the Fed’s policies - particularly QE2. That article is titled Sarah Palin for the Fed? and is well-worth a read.
All of these articles point to less-than-ideal economic conditions for the United States in the future - unless someone at the Fed begins to accept the reality of our current situation.
We can only hope…
- tdc
*Note: Thanks to Conservatives 4 Palin - they have a good round-up of these articles and more at the link
*Photo credit: uk.ibtimes.com
