Bernanke's reason for QE:
Bernanke said the easing in financial conditions has promoted
economic activity through a variety of channels — including lowering
the cost of capital, boosting the aggregate wealth of U.S. households,
and improving the competitiveness of U.S. businesses abroad.
- Inflated the stock market to increase wealth of US households
- Reduced the yield of corporate bonds
- Depreciated the US dollar for exporters to compete
This is not the mandate of the FRB.
There is absolutely no menion of reducing unemployment. All these measures are inflationary. He is failing on the dual-mandate of the FRB.
I would like to hear more about the 'Poverty Effect' as a result of zero bound interest rates.
Also, I would enjoy hearing about the 'Unemployment & Business Failure Effect' as a result of higher cost inputs.
This is not a financial system but a financial disaster. When you have Bernanke panicking and talking about QE every time the stock market drops 1%, there is no confidence in this financial market. The problem with the eonomic slowdown now is Europe and it has nothing to do with the money supply. Every time there is a crisis anywhere in the world that impacts the US economy, Bernanke has the right to print money?
Bernanke is not increasing household wealth. He is increasing household debt with no wage inflation.
Paul Volker says low interest rates cause asset bubbles. No kidding?
"It is a generally accepted principle in economics that the price of anything should be the market price, unless market failure can be demonstrated. So unless anyone can demonstrate market failure in the case of interest rates, rates of interest should be determined by market forces."
This is why Bernanke should not constantly fiddle with the market and the interest rate. The interest rate was at record lows 3 years ago and today is even lower. If there is no economic recovery after 3 years, then try distributing the money to the middle and lower income earners instead of buying treasuries. Europe was a part of the problem but men like Bernanke created the sovereigh debt crisis with reckless monetary policy.
People that have nothing sensible to say, usually just criticize. This is your intelligent response to the facts. The FRB is not abiding by its mandate. Is there any mention about the unemployment in his letter?
Do you understand how he is causing havoc all over the world with excessive volatility in forex and causing inflation and unemployment globally. His role is not to inflate the stock market. Does he do anything else beside mention QE?