Tag: The Federal Reserve

The Fed's Great Adventure in Inflation

Posted on by The INO.com Team

In the current policy and media stoked market environment, anything is possible.  It's  the wonderful, magical world of hands-on policy making.  5 years after the financial crisis, but still not enjoying a ramping economy like the good old (and long gone) days of the last great secular bull market (RIP 2000)?  Just sit back, relax and let the man in charge control the image.

"For the next hour, sit quietly and we will control all that you see and hear. We repeat: there is nothing wrong with your television set. You are about to participate in a great adventure. You are about to experience the awe and mystery which reaches from the inner mind to – The Outer Limits." Continue reading "The Fed's Great Adventure in Inflation" →

Has the economy strengthened enough to withstand the pullback?

Posted on by The INO.com Team

Hiring is soft, pay is barely up, consumers are cautious and economic growth has yet to pick up. And yet today, the Federal Reserve is expected to take its first step towards reducing the extraordinary stimulus it has supplied to help the U.S. economy rebound from its deepest crisis since the Great Depression. That begs the question....

Has the economy strengthened enough to withstand the pullback?

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As always, we would love to hear your thoughts on the subject. Please take a moment to vote and leave a comment.

Every Success,
The INO.com team

The Federal Reserve Relies on a Flawed Economic Model

Posted on by admin

By Lacy H. Hunt, Ph.D., Economist

In May 22 testimony to the Joint Economic Committee of Congress, Fed Chairman Ben Bernanke issued another of many similar positive interpretations of central bank policy. Yet again, he continued to argue that quantitative easing has decreased long-term interest rates and produced other benefits. He called economic growth "moderate," a term that he has often used without acknowledging that the Fed's forecasts have repeatedly been far above the mark. Within less than two months—or by the time of the July FOMC meeting—the Fed had downgraded the economic growth to "modest," tacitly acknowledging that program of open-ended $85 billion purchases of government and federal agency security purchases had failed to boost economic activity.

The Fed's polices have not produced the much-promised re-acceleration in economic growth. In the first half of 2013 as well as the latest four quarters, the real GDP growth rate was a paltry 1.4%, even less than the 1.9% growth in the 13.5 years of this century, and less than two-fifths  of the 3.8% GDP growth rate since 1790. Only growth in the 1930s was less than in the 2000s, a time when Dr. Bernanke played a major, if not dominant, role in monetary policy decisions. Continue reading "The Federal Reserve Relies on a Flawed Economic Model" →