Wikinvest Wire

On the Fed's exit strategy

Tuesday, February 09, 2010

Fed chief Ben Bernanke will appear before the House Financial Services Committee tomorrow to talk about how the central bank might mop up the trillions of dollars they've injected into the economy, something that, in the view of many analysts such as Kirby Daley of the Newedge Group, is quite premature.

Daley's comments about the U.S. housing market seem to be spot on, including the prospects of elected officials launching new programs during this election year to reduce loan balances for underwater homeowners. Of course, this will have all sorts of unintended consequences and none of them are likely to be good.

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Anonymous said...

Ben should never have started monetizing GSE debt. Now the bank may never be able to stop. Things could spiral out of control. Once people figure out that they can borrow and not repay with impunity, they will demand ever more printing to subsidize them.

Printing more on top of this to "pay interest" won't solve this problem. Ben has created a much larger disaster for the future of the country.

oc bear said...

When is congress going to figure out that every time they bail out one irresponsible person they potentially tick off 10 responsible people. Well that's assuming the resonsible understand what's going on. That's the chance congress takes -- that no one is watching. I wonder how many of the irresponsible actually vote?

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