Bernanke Feeling the Squeeze From Economy
Fed chairman is facing political pressure on all sides over the way he is responding to faltering economy
By Chris Stirewalt
Fox News
Published August 24, 2011
New home prices dropped again in July, continuing a steeper decline in values than during the Great Depression.
Meanwhile, the Federal Reserve Bank of Richmond offered a bleak report on economic output in its region for the current month, a slide to -10 from -1 in July. Power Play is no economist, but that sounds worse.
Why then, did stocks soar on Tuesday? Not only did markets have their best day in weeks, not even the largest earthquake to hit the East Coast in decades could shake them from their heights.
The answer is that the news on Tuesday continued a concatenation of economic indicators so bad that investors now believe that Federal Reserve Chairman Ben Bernanke will have no choice but to engage in another round of what is euphemistically called “quantitative easing” in Washington and on Wall Street.
That’s when the Fed conjures up more money to invest, increasing demand for bonds, mostly issued by the government itself, and thereby keeping interest rates low. These cash dumps also lessen the value of the dollar, which artificially increases prices, creating the illusion of growth. The assets are held by the Fed and until a brighter day when either markets have returned to their former vigor, or when the bonds mature and then the government pays itself back.
Full story: http://www.foxnews.com/politics/2011/08/24/bernanke-feels-squeeze-as-economy-falters/
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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