We won't be able to write a typical comment today. We urge you to "search" in our archives for comments about the Fed and how we have believed for some time that they are in a box with no good solutions. The markets have finally come to the same conclusion.
The Fed has to ease as the housing recession is spilling over onto "main street" and if they continue to ease the dollar will accelerate its decline after losing one third of its value over the past 5 years. The low interest rates and falling dollar will encourageforeign governments to unload their US investments (mostly fixed income) and discourage new investments. Also, the lowering rates could cause inflationary worries despite the fact that controlling inflation is the primary obligation of the Fed.
After all, if central banks all over the world could remedy economic problems, debt problems, and credit freezes by printing more money or giving every man, woman, and child $100,000, there would never be any of those problems again. Would you feel richer after receiving your $100,000? The printing of excess money is the road to economic ruin by central banks that choose to do so--we hope helicopter Ben understands this reality.
Many of our past reports detail this problem and you can search for "Bernanke" in our archives (lower right on the Commentary page) to find them.
