Monetary Policy as Farce

As Bernanke & Co prime the pump for the next financial disaster, I cannot think of a more damning indictment of the way monetary policy has been run in this country over the past few decades than this graph.  It is the real Fed Funds rate, or the Fed Funds target less CPI.

 

Since 2000, the real Fed Funds rate has been below zero an astonishing 45% of the time.  The average rate has been 0.16%.   

Bernanke claims that the Fed bears no responsibility for the Housing Bubble, at least as it pertains to the operations of the Federal Open Market Committee.  Such stunning cluelessness gives investors no confidence in the authorities' ability to not destroy it's citizens wealth.

Marx said that history repeats itself, first as tragedy, then as farce. Twelve years into the asset-driven economy, we are now in the stage of multiple farce.

Comments

[Toro]

For the record, I went net short yesterday.

Woe betide anyone who apes what I write on the Internet!

[psychodave]

An humble question for our Woe Bestower (a.k.a. Toro):

Short fixed income?

Short risk assets?

Short everything (like Mellon's famous "Liquidate Everything!" comment)?

If you're short the Holy Glod, then yer a Woe Bestowing Blasphemer.

[Toro]

Net short equities. I own stocks and have bought inverse ETFs. But this is a short-term trade, i.e. a reversal of 8%-10%.

Oddly, I was up today and am up this week as I've had a few of my smaller stocks explode higher.

T.

[dacian]

"Oddly, I was up today and am up this week as I've had a few of my smaller stocks explode higher."

Is that net short then? Or long/short? thanks

It is my feeling that this market will go very expensive again on intense speculation.

I just went through a bullish speculator's blog, and the guy (although experienced and who call himself a contrarian) answers to his comentators with things like "get lost". The guy is overly bullish and very confident we will retest the highs of 2007 on S&P this year. I hope we go higher than that so that we can implode afterwards.

[psychodave]

"a few of my smaller stocks explode higher"

Thank you for the "higher" adverb ... I never know with those pesky little critters.