“He’s the one they call Dr. Feelgood”

“He’s the one they call Dr. Feelgood, He’s the one that makes ya feel all right.” Thanks Motley Crue in describing Bernanke and the Fed as we await another round of the drug of cheap money that the longer we artificially get, the more difficult it gets to wean off. Because Fed induced historically low interest rates discouraged deleveraging by pushing refinancings and also encouraged more borrowing, mostly in the public sector, the irony of today’s Fed move is if it is ‘successful’ in generating inflation and growth, the higher interest rates that would follow would not be met well with a still very highly indebted private economy and public sector. So, any ‘success’ the Fed achieves sows the seeds of its own undoing. Threading a needle indeed describes the Fed’s intent to get just the right amount of inflation with just a small, if any, rise in interest rates. Fingers crossed.

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