As cries grow for Ben Bernanke to raise rates before he plunges us all into hyper-inflation (see gold, oil, and real-estate prices in Asia), Ben will likely continue to implement his carefully devised strategy:
- Intentionally wait too long to raise rates, get the economy cranking, and, hopefully, trigger uncomfortably high inflation
What will this accomplish?
- Faster growth, happy Congress, more jobs, etc.
- Faster erosion of the real value of our humongous debts (which haven’t gone away)
What’s the ideal rate of inflation, as far as Ben is concerned?
- A rate high enough for China and all of our creditors to be screaming at us and threatening us but not quite high enough that they actually stop lending to us
So when Ben ignores your cries to raise rates before it’s too late, at least take comfort in the fact that he’s hearing you, and he’s not stupid. He just has a different plan.
Bloomberg: Federal Reserve officials may today indicate their $1 trillion injection into the economy is helping to revive growth without requiring an increase in interest rates from near zero, economists said.
Policy makers will probably maintain their commitment to keeping rates low for an “extended period,” said Laurence Meyer, vice chairman of Macroeconomic Advisers LLC in Washington and a former Fed governor. They may also start a discussion about altering the wording of their policy statement, to leave them more leeway to signal a change in the future…
“They’ve got, for a lot of reasons, to say that it looks like what we’ve been doing has been working,” said former Atlanta Fed research director Robert Eisenbeis, now chief monetary economist at Cumberland Advisors Inc. in Vineland, New Jersey. “But if they’re too exuberant about it, it’s going to trigger expectations of a policy move quicker than perhaps they might like to do.”