November 9, 2010
So much for the Fed’s two mythical mandates of promoting “maximum employment” and maintaining “price stability.” First, we had Bernanke’s predecessor Greenspan confirming in late July on Meet the Press what everyone knows: namely that the primary goal of the Fed is merely to encourage higher stock prices: “if the stock market continues higher it will do more to stimulate the economy than any other measure we have discussed here.” And now, courtesy of an Op-Ed by the current chairman, we get confirmation, again, just three months later, from the current chairman, that the Fed cares mostly about stimulating high stock prices, solely to create the completely artificial illusion of “wealth” for the few, the proud, the shareholders, and the banking oligarchy.
Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.
See, the thing is Bernanke is absolutely right…
This article was posted: Tuesday, November 9, 2010 at 1:20 pm