Ben Bernanke, Flame-Thrower
In an ideal world, investors would allocate capital to the stock market because the potential returns were attractive.
Not because The Federal Reserve had obliterated all the alternatives.
Yes, the Fed’s announcement that it would keep interest rates at zero through 2013 arrested the markets’ free fall (and has the added, noxious side effect of whacking the dollar).
But what ammunition does the Fed have left if/when the slide continues?
Extend that date to 2015?
Forever?
Question #2: what happens when if/when the market goes down and everyone’s money — Grandmas’, retiree’s, you name it — is invested in it? (if “invested” is the word).
What Would Paul Volcker Do?
Can anyone imagine Paul Volcker making ad hoc monetary policy moves in response to stock market gyrations?
Everyone assumes that Mr. Bernanke’s agenda is to elevate stock prices.
However, a more dispassionate observer would be forced to conclude that Mr. Bernanke’s real aim is . . . to drive gold prices higher.
