How Bernanke Manipulates the Markets

Question: How do you make stocks and bonds rise in price at the same time and increase the wealth of the investor class?
Answer: You declare your intent to buy $85 billion of  and mortgages every month for a considerably extended period as a way to maintain the lowest rates of interest in recent history.
Question: How do you drive the price of stocks and bonds lower at the same time, reducing the wealth of the investor class, and threatening the housing recovery?
Answer: You announce your intention to introduce tapering and reduce the amount of bonds and mortgages you are buying every month, with the intent of ultimately ceasing such purchases completely at some uncertain date in the future.
Question: How do you correct(reverse) the intent to begin phasing out quantitative easing in the light of stock and bond markets reacting in an overly negative manner that threatens the economic recovery?
Answer: You announce that you may indeed reduce the dollar amount ..

Continue Reading