[quote=FlyerInHi]The loose lending standards led us the economic crisis.
Today is a much different situation. We are not in a bubble and we have a fiscal policy that is counter productive.
Bernanke said than “federal fiscal policy continues to be a restraint on growth and a source of downside risk.” Bernanke repeated his compliants about congress several times.[/quote]
How do you know there’s not a bubble somewhere in the economy. The fed is very good at creating bubbles and usually nobody sees them very well until it’s too late. The problem for the fed this time around is the bubble they are building isn’t being felt in the overall economy. The dot com bubble and housing bubble actually produced quite a few jobs for the common man.
This time the bubble in bonds or perhaps stocks isn’t spilling over into the real economy much and so they aren’t getting much measurable growth from the bubble they are creating this time. If your flooding the market with 7% of GDP in money and only getting 2% growth than that money is finding it’s way into rising prices of goods and assets.
Wwith that said hindsight will be everything yet again. When we look back at this time 5-10 years from my bet is we’ll be saying Bernanke’s policies were dumb because created this future blow up we haven’t experienced yet. The alternative is somehow these policies work to create significant growth and nobody in congress or the future fed president screws it up. You’d think you’d have seen something positive after 4 years of QE and 0 rates but there’s not much there yet. It’s possible I suppose and considering the short term pain that any alternative offers maybe you have a point. It’s better to be on life support than dead if you’re hoping for a miracle.
