What’s amazing about the latest bout of quantitative easing is the total lack of pretense. By that we mean Bernanke isn’t even pretending that that QE would actually benefit the real economy.
We noted yesterday that by concentrating buying at the short end of the yield curve, Bernanke was punishing savers (pinning short-term rates to the mat) and bailing out banks (keeping the yield curve steep).
But check out this line from his op-ed in the WaPo yesterday:
This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action.
Amazing. Bernanke’s evidence of success is the market pump-up. There’s not necessarily anything real behind it (though the economy is improving, at least against expectations), but Bernanke’s just happy to see the market rise.
Of course, he hopes the wealth effect from stocks will spill over into real economic gain, but it still reeks of manipulation and intentional bubble-blowing.