St Louis Fed's Bullard Ignores QE2 Consequences (What Consequences!?)
What a tangled web we weave when first we practice to completely destroy the currency. St Louis Fed President James Bullard is going to learn that lesson, it's just a little delayed until the actual consequence knocks his ass out. Oh, it will. Just not tomorrow, not next week, perhaps not even next year. But it will. And when it does, be sure you reference back to boneheaded statements like these so we can all point fingers (while standing in the bread line) and say "I told you so!"
The benefits of the Federal Reserve’s second large scale bond buying program will outweigh the risks, Federal Reserve Bank of St. Louis President James Bullard said Monday, noting positive effects of past purchases.
Bullard said that typically the maximum effects of monetary policy can be seen with a lag of six to 12 months and that the effects from bond buying should be conventional as well. The real effects of bond buying will be hard to disentangle from other factors though, he said.
Less than a week after the Fed launched its second quantitative easing effort, or QE2, Bullard noted that the pace of the recovery has slowed, creating a disinflationary trend that the Fed had to address. Labor markets also continue to be weak, he said, and he believes they will lag the recovery as has been the case in the last two recessions.
The risks? Well rampant inflation, for one, not to mention the precedent that is set when the Fed continues to supply the federal government with operating cash under the guise of economic stimulation. Anyone else see the problem here? Obviously not guys like James Bullard who only understand MORE. Hey, I love more as much as the next girl but enough is enough ifyoufeelmeonthat.
The pace of recovery is likely to be frigid and pathetic for months or years to come and the Fed can run the presses on full every day for the next two years and not make a dent in that fact. Obviously cheap, easy money is NOT the problem. Again, obvious to everyone but the guys with their foot on the monetary clutch.
It has to end somewhere. JDA has her pennies bet on it ending with a brick wall and one hell of a crash.