Ben Frankenstein and his hunchbacks

In response to the sharp selloff in US Treasuries and MBS over the past
week two weeks, Ben Frankenstein and his hunch back assistants, I mean
Ben Bernanke and the Fed, are doing some PR to tell the world that their
grand experiment of asset purchases is not going awry but is a
reflection of the success of their actions as the economy slowly
recovers. They said they are not trying to set a specific level of rates
but that is pure semantics as they truly are trying to set rates and
that’s lower. The most important mandate of the Fed is price stability
and whether its quantitative easing or the belief that the worst is
over, the Fed is on the cusp of losing the confidence of the market in
this respect as the $ index is breaking down below the key 80 level and
gold is just $30 from an all time record high. We may not see yet the
whites of inflation’s eyes and some still talk about deflation but gold
near $1000 says a lot about the market’s belief on this.

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