To me, there is no straighter shooter than Fed Chairman Ben Bernanke. For years he has been telling us his plans, contingent and real – and he has not deviated once. He tells the truth and although his tactics are unconventional, in 2008 we had certainly not been in a similar situation for nearly 70 years. To the dismay of many ‘wanna be’ economists, Chairman Ben has ventured out into a world very few have ever returned from unscathed. Potential disaster? He’ll have none of it!
He has risked major future inflationary conditions all for the betterment of the US economy and in a broader sense, the global economy. Some would call him a traitor, diminishing the value of the precious greenback, the world’s reserve currency while others would call him a true hero, a renaissance man who refuses to be guided by political rhetoric and influence. He knows what he wants to achieve and will not be deterred.
Last week the Chairman made some comments at an Economic Club and as usual the market had a reaction. Initially it was disappointment – I suppose some were hoping Big Ben was going to come out with some more QE or at least announce the plans into 2013. No dice, and the markets fell on the lack of clarity. Same language as the last meeting, and the last appearance, and so on.
But what is interesting is the Fed has been blazing a trail for months and while consistent they have been ahead of the curve, reacting to economic data as it is delivered. There really is not much more they can do, in the words of Bernanke ‘monetary policy is not a panacea’.
He has been stating for several months about needing a fix to fiscal policy. However, one quote from the other day got my attention: ‘2013 can be a good year if the fiscal cliff is avoided‘. I take him at his word here, an improving economy in the US along with ramped up growth in China and a bottom in Europe. The next year could be a nice pivot higher….IF!
Bob Lang is the Senior Market Strategist at www.explosiveoptions.net