Why Won't the Pundits Take Bernanke at His Word?
Ever since 2009 pundits have gotten Uncle Ben wrong. Not because of what Bernanke says but by what the pundits think he really means. He said he was going to keep interest rates low for an EXTENDED period of time. I kept arguing here that meant many years because it would take as much to run through the housing foreclosures.
But the pundits kept arguing on a daily basis that it meant 4 months, no 6 months no maybe a year. Finally Bernanke had to come out and give an earliest date of end 2014. Pundits moved on to Greece.
Now all I hear is tapering and how Bernanke will start to slow things down despite the fact he has given his parameters. He said he will continue to buy until unemployment comes down to a sustainable 6 1/2pct rate.
We aren't going to see 6 1/2 pct unemployment any time soon except through maybe attrition, which is not a healthy way. So I submit we will have a couple years of QE.
And if the economy for some reason takes off well we won't need QE.
I submit today's action was nothing but good old fashion profit taking. But the pundits have this need to always give reasons for things.