What Do Central Bankers Really Look AT
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QUESTION: Can you please comment on the following. I hear incessant talk about the market being supported by Bernanke. The Fed gets the credit for the market going up. (And when it goes down for not doing enough). How much truth is there in this mantra? How much is the Fed actually affecting stock prices by what they’re doing? It is very confusing to hear day after day CNBC commentators point to the fed as the cause for seemingly everything good and bad in the markets and economy.
ANSWER: Absolute nonsense! The Fed is worried about the rise in the stock market for they are as confused as the talking heads. The talking head’s problem is this constant myopic view of the domestic economy as if everything begins and ends here. We are working urgently to get a new book on the globalization of the economy out ASAP that illustrates this problem that plagues not just the TV comments, but the economics taught in schools. The reason why increasing money supply by the Fed FAILED to produce inflation is the complete failure to comprehend the global economy. It is the global capital flows involving debt and capital investment that drives all world share markets and currency values. The Fed does NOT even control the money supply! International capital does!!!!
