In last five years Feds took many positive actions to revive the economy. Dow went from 6,519 points on 3/9/09 to 15,524 points on 5/22/13. With premature announcements of taper and rate hike Feds have unnecessarily created a huge amount uncertainty and fear among investors. This can cascade into a huge downward spiral and undo all positive actions that have taken.
Is it too hard to understand that when investors pull out of investments, markets all over the world fall, businesses suffer, unemployment goes up, consumer confidences slumps and no one wants to spend for buying houses, cars, vacations, clothes, cell phones, restaurants, and lattes?
Feds have put themselves into a very bad situation. If they taper and hike the rates at the end of the year economy is bound to suffer and if they don't the situation will look even worse. It seems like Bernanke is influenced with his plan to leave in January and wants to take some drastic action before he leaves.
Bernanke need to come forward and acknowledge that it was a mistake to prematurely make announcements of taper and rate hike. It would be best if he hands in his resignation and exits ASAP.
This is always the case. Tapering always causes this to happen. Stimulating forever would be the only way to avoid this. We would benefit but our children would pay for it later. I don't think the excuse that you did not understand this would fly. Your children's undoing would still be your doing. You can't have it both ways.