Unpredictable Bernanke Speech

Bernanke once again investors expressed their support for the U.S. economy "bottom line", that is, "will do everything possible" to ensure that the U.S. economy continued to recover. Bernanke's remarks boost the market, last Friday morning strength in U.S. stocks, the Dow rose after opening up 1%. Was reassured, to have been drinking the "magic potion." With investors doubt the Fed's "loose" have already been explored, Bernanke is in the "hat and no cattle."

Ordinary people in August is not a holiday is visiting the bar to go out, and Bernanke frightened in August each year passes. August 2007, Bernanke also former President George Bush hands, "the sub-prime crisis" signs appeared, no less to worry about Bernanke. August 2008, Lehman Brothers, the interest rate policy is difficult, Bernanke was "financial crisis" drove round and round, not only busy to look for buyers of Lehman, another busy to keep American International Group (AIG). August 2009, when all eyes are cast to the new President Barack Obama to save the economy, Bernanke really make something of concern, that is, how to seek re-election, after all, this is not his life can be learned about things.

August 2010, Bernanke and consequently the worry, take-a Japanese-style deflation crisis, the speculation that this may be the most since Ben Bernanke became Fed chairman could not eat sleep of a summer.

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Since the Fed cut rates to zero, the whole world like the ears to listen to Bernanke speech. Since September 2007, the Fed lowered rates to the end of 2008 from 5.25% to 0.25% of zero, since the interest rate has continued since. When the parties shouted the Fed should continue to "liberal policy" on August 27 in Wyoming held the annual meeting of the Federal Reserve, Ben Bernanke, said calmly, and only when necessary will be taken to use "unconventional" monetary policy to support the U.S. economic development. The same day, the U.S. Commerce Department reported that weakness in inventory investment enterprises, coupled with huge trade deficit, economic growth may be caused by the first quarter, 3.7% to 1.6%.

The confidence to sell bonds to buy virtual dark

Bernanke's speech eloquence must not compare Obama, the simple words, its effect is greater than that. At the annual meeting, Bernanke said publicly that the Fed have enough hands "weapon", if left to investors this superficial reverie considerable space. Speculation that Bernanke's next move is certainly a large-scale acquisition of bonds, and further expansion of the Fed's balance sheet. But in fact, serious taste of Bernanke's speech, also read at a "yes". Even the International Monetary Fund (IMF) Raghuram Rajan hit back at former economist, said: "The Fed is not a time of economic crisis Superman."

End of its rope, the Fed mortgage market may be coming to the end of small thinking. Prices continued to fall against the U.S. economic recovery is currently the most important factor, the Fed's next move is very interesting. Previous loose monetary policy, the Fed bought the mortgage assets of 1.25 trillion U.S. dollars, although at low interest rates to maintain the liquidity of mortgage loans, the Fed also in these investments profitable. Ministry of Finance began to Fannie Mae and Freddie Mac began to reform, external forecasts, the Fed may gradually withdraw from the housing market, is uncertain as to when to quit.

Differences emerged within the Federal Reserve

Princeton University economist, former Federal Reserve Vice Chairman Alan Blinder that the Bernanke Fed was forced internal pressure, may not be through "unconventional" measures to further ease monetary policy. He believes that if only to act in accordance with Bernanke's own style, he might take some measures, but the internal and the Federal Reserve Open Market Committee is already in raising interest rates and other issues there are many differences, so Bernanke will be difficult in the liberal policy some action. Analysts said Bernanke in his speech, repeated use of ambiguous words, the Fed has disclosed the existence of differences within the respect of many policies.

Unemployment rate, the United States a number of economists are becoming increasingly pessimistic, if Obama does not take great efforts to infrastructure, high unemployment, the United States at least for 10 years time. This argument is also consistent with Bernanke, the current issue of greatest concern: whether the U.S. will repeat the mistakes of Japan into a deflationary crisis. But Bernanke also argue that deflation is not the main risk facing the United States, "the Federal Open Market Committee strongly oppose the deviation from price stability target, so the price down." United States "New York Times" to describe that this is far Bernanke made in the deflation of the most powerful position.

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