'The Federal Reserve has moved closer to embarking on a new round of its controversial money-pumping after the central bank and its chairman Ben Bernanke highlighted a grim outlook for the U.S. economy. Bernanke on Wednesday opened the door a bit wider for the Fed to return to buying securities in the months ahead to buttress a weak recovery and keep inflation from slipping too far below its newly adopted 2-percent target. "It sounds like the finger is on the trigger," said Thomas Simons, a money market economist at Jefferies & Co. The Fed's announcement that it was unlikely to raise interest rates until at least late 2014, more than a year beyond its previous guidance, immediately pushed down Treasury bond yields and Bernanke's comments to the media raised expectations of a further round of so-called quantitative easing, or QE3.' http://www.reuters.com/article/2012/01/26/us-usa-fed-idUSTRE80N1DQ20120126
Lol. Personally, I think he is VERY intelligent. He just does not seem to understand people or macro-economics...like many bankers I have known. And that is what Bernanke is...a banker, nothing more. When will the masses realize that the Fed is full of bankers...they have near ZERO experience at running economies or even businesses...and now they have the power to alter the U.S. and world economies. To say the Fed has too much ignorance and too much power is a galactic understatement (IMO).
if he prints money the market is going to go side ways instead of up and down, this is the worst time for traders no clear directions
Anybody in the market --- assume you mean equities -- should not be there . Although there is a strand of thinking that says , though all might be tottering around them , the strong companies ( reserves plus real forecast strength and good yield) will profit majestically as the prices rise to account for inflation , moving to hyper inflation , and as a " parking spot" for "worthless" cash You need privileged info'n methinks .
I agree. Unless you have inside information or are picking individual companies - I would not think stocks in general are a good place to be for maximum return over the next few years. But I am NO expert.
Personally, I would not assume any company will 'always' be 'good to put money' into. People used to think that way about GM. But I agree they both look strong right now.
Despite widespread opinion to the contrary, central banks do not really have the ability to "improve" the economy. The Federal Reserve HAS NO CONTROL OVER INTEREST RATES !!! (besides from further devaluing the currency) When the federal reserver tries to lower interest rates, it either has to borrow money (increasing interest rates) or order the printing of more money (increasing inflation and thus increasing interest rates). If the Federal Reserve tries to "expand the money supply", it is limited by the willingness of people to take on more debt, which effectively cannot be made to change. It is just shifting around where that debt will be. If it tries to increase interest rates, it has to pay the additional interest to all the investors. Where does it get this money? I cannot believe that anyone actually thinks that a central bank can dictate interest rates! There is a market equilibrium. Messing with the money supply will not change this equilibrium. But what it can and does do is act to magnify the effects of taxation. If there is now 20% more money, and that new money is spent by the government, it means that more of your inflation-adjusted real-worth income will be going to taxes, since you have to find a way to get that new money to pay the taxes, which have now increased due to inflation. Inflation would essentially be meaningless if taxes did not exist. People would place much less value on money that continuously declined in value.
I simply do not follow your Post . The Bank of England sets the base interest rate for the UK and the ECB does exactly the same for EZ countries . And it is my understanding that the Fed does the same job in the US . To the extent that alleged experts in these Banks think interest rates are one key determinant of overall future economy strength /weakness , it seems pure semantics to say that Central Banks do not control interest rates .
This is utterly false. The Fed directly controls the discount rate and indirectly controls the Federal Funds Rate. Make NO mistake...if the Fed wants interest rates to go up or down badly enough...THEY GO UP OR DOWN. http://beginnersinvest.about.com/od/banking/a/aa062405.htm
Bernacke has no choice and he knows it......its either QE 3 or the system implodes as it did in 2008!