QE2 remains in dock, for now

To those who think the Fed is contemplating the initiation of QE2, Fed members Lacker and Duke in interviews seem to be playing down any possibility now as they currently believe current policy is more than enough. Lacker said “consideration of further easing steps is very far away…I’m comfortable with rates where they are now.” Duke says the Fed has already “done a lot” to help the economy and she thinks they are “in the right place” in terms of policy. What invites these questions of more stimulus and QE2 is the decade long reputation of the Greenspan/Bernanke Fed where they believe that every economic problem of substance can some how be solved by monetary policy. Bernanke, who in ’02 revealed his Helicopter Ben reputation in a speech, who I upgraded to B52 Ben in ’07, has trained investors that he will always “do something” in response to every slowdown.

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