Free Britannia

Bulldog wrote:The confirmation that cash (and T-bills, notes etc) are not likely to offer much of a yield for the foreseeable future results in a rush of capital into an asset that has never offered a yield ever (in income terms)

John Stepek - MoneyWeek Editor wrote:The latest move might seem complicated. But it all boils down to one thing. Bernanke is telling investors: “I will keep money as cheap as I can for as long as I possibly can”.

How do we know? Everything in the way this presentation was spun pointed to ‘downside risks’. You don’t have to be a raging optimist to accept that some of the data on the US economy has been looking more positive recently.

There are plenty of caveats to all this – I’ll mention some in a moment – but the Fed was resolutely gloomy about growth prospects. And as the FT notes, “most of the FOMC expect inflation to be at or below the new target of 2% at the end of 2014”, with unemployment still above 7%. If that’s the case, then it in fact “implies that monetary policy is too tight” just now.

In other words, Bernanke is just looking for an excuse to press the button on the printing press again.