The Dog Ate My Exit Strategy

On July 21, 2009, in the Wall Street Journal, Fed Chairman Ben Bernanke outlined the smooth and seamless exit strategy for the Federal Reserve and its now overly accommodative policies. In 2009 the Dow Jones Industrial Average was trading at 8,100... it's now at 14,500. The Federal Reserves Balance Sheet was circa 2 Trillion dollars (up from 800 Billion pre 2007-08 crash). Now it approaches $ 3.5 Trillion. The unemployment rate was....9.5%...now 7.7%. However, the percentage of people in the work force in 2009 was over 65% Now it is 63.5%. Loose accommodative money has increased stock values and had little impact on real unemployment. One might think the Fed should reevaluate their theories and assumptions. In the meantime, full speed ahead. The aggregate effect on employment by this loose money policy, as measured by a percentage of workforce, is muted at best. Ben has his hammer, and he is certain that unemployment is the nail. Can monetary policy improve employment? Or does...(Read Full Article)

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