All is Well in Bernanke Land
As Chair of the Council of Economic Advisors, Ben Bernanke said oil prices at $60 a barrel are “transitory” – he was almost right; instead of heading down, however, they were heading to over $140 a barrel. After extensive volatility, we are back at $54 a barrel and now glad how “inexpensive” oil has become.
Now as Fed chairman, he was eager to share more of his forecasting acumen. In testimony today, he forecast commodity prices will remain low.
The person who did not see the credit crisis now sees the recovery.
When quizzed whether the Fed is printing money to finance government spending, he did not deny it, but instead talked about how “close cooperation is necessary” between the Fed and the Treasury.
Bernanke reiterated that the intent of the Fed’s program to buy long-term bonds was not to target a long-term rate. It makes one wonder what the program is intended to do then, other than to facilitate government spending.
For now, we can all be glad that Bernanke sees signs of stability. If he really did, however, wouldn’t it be appropriate to start mopping up some of this liquidity?
Axel
Axel Merk
Author of Sustainable Wealth
President and Chief Investment Officer, Merk Investments
