Last Wednesday, Ben Bernanke kept the juice flowing. He did not withdraw any of the $85 billion the Federal Reserve has been printing each month. This shocked the markets, sending stocks sharply higher initially. However, within days of the pop, the stock market finds itself lower than prior to the announcement. Why?
Simply put, the market realizes this is a fight where the Federal Reserve is shooting blanks. Not only does the market need to worry about when the Federal Reserve will remove some of the QE from the market…again, but now the question must be asked whether or not this is just getting silly. After printing almost $4 trillion, what has been accomplished? Is there any real benefit to printing another $85 billion next month, the month after? If no money had ever been printed, would we naturally be seeing a stronger recovery? I for one believe the economic recession would have been harsher, but truly believe we would be in a much more sustainable recovery by now. When you let the economy flush out, the weak hands are removed and the strong survive, thriving. It is just like nature. Yes, it would have been rough, but the recovery now would be much more robust. Instead we have an economy drugged and on life support from the Federal Reserve and their antics. Is it healthy? Hell no!
Major questions should be asked, investigations will eventually be done. Is the Federal Reserve holding onto a strategy that has shown little to no result? One thing is for sure, those of us around in the next 10 years will feel the pain of trillions of Dollars having been printed. The poor and middle class will feel it sooner.