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skwestorange
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Private Investor/Trader. Formerly a businessman and Consultant
  • Fed is loosing credibility fast! 0 comments
    Jul 29, 2010 1:22 PM
    Not a day goes by without a member or more the FED talking, rather reacting to some economic stat. For instance this morning, James Bullard raised concerns of deflation and urged FED to resume buying Treasuries. Yesterday it another Fed member talking about why we don't need to fear deflation. A few days ago it was another member indicating the need for Fed to raise interest rate soon. The other day, it was Benanke in his testimony one day raising fears of double dip and in the next one the next day calming fears of double dip. These pronouncemenst always seem to follow an economic stat or two that came out that day or that week. Sometimes, it follows some crisis related news out of other parts of the world.

    Taken together, if one look at these Fed members talking -both timing and the mssage- one wonders if they are just seeking notoriety. Other tourbling questions include: Are they attempting to help their region's bankers/business(s)? Are they attempting to support their local politicians? Are they promoting their own political ideologies? Many more I am sure.

    Is it not true that they need to watch the stats as they evolve, review their collective trends, and rates of change; and put them in the context of all other data and policy(cies) and make decisions on rates or other measures in support of the FED mandates?.

    Those old enough may recall that a decade ago and before Fed members rarely spoke what is on their mind that day. In an effort to show transparency on the part of the FED, it seems its members have taken to reactive pronouncements that are not conducive to sound policy decisions when they meet. In addition, their prononucements of the day seems to move the markets, thus destorying public confidence in markets. It is only a matter of time before the FED looses all its credibility with the general public.
    Sonny Kasturi



    Disclosure: Not applicable
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