Seeking Alpha

What the Fed did last week has altered the way investors will need to look at the economy going...

What the Fed did last week has altered the way investors will need to look at the economy going forward, says Goldman's Jim O'Neill. The Fed has always had a measured approach to its dual mandate for both price stability and full employment, but its apparent now that's all changed. The focus now is far heavier on jobs than it is worrying about the inflation that critics worry QE will cause, O'Neill says. "QE infinity," as he calls it, is a sort of "shock-and-awe" move that's changed the balance of everything.
Comments (6)
  • The Fed would kiss the ground if they could generate even a whiff of inflation.

     

    Sadly, every cent they push into the economy goes to the banks for the purpose of extinguishing bad loans, which end up on the balance sheet of the Fed. Bad loans are still bad loans, regardless of where they reside. Paying 100 cents on the dollar for something that is worth maybe 10 just flushes 90 cents down the drain. It certainly does not create jobs. And regardless of what the Fed thinks is real money, the size of the derivative "issue" out there is close to $750 trillion. Even if "only" ten percent of those positions are 'bad', there is no way that the paltry sums which the Fed can create are going to have any impact on the 'problem'.

     

    Hence, we have bad banks, no job creation, and no inflation. And, by the way, a $16 trillion, and growing, deficit which is going to have to be paid in current, NOT INFLATED, real dollars.

     

    Maybe. If we last that long. I am not calling for Bernanke's head (perhaps Paulson is the guy that the country ought to think about hanging for what he did to America) but i can understand those that feel his policies have been the bain of an economic recovery. What they fail to realize is that in Washington, it is Goldman Sachs before country. They got theirs. Screw the rest of us. Let Bernanke swing in the breeze.
    17 Sep 2012, 08:30 PM Reply Like
  • So well said, thanks. But wasn't it Marty Zweig who told us not to fight the Fed? We are their humble servants, aren't we? Inflation or bust, here we go ...
    17 Sep 2012, 09:25 PM Reply Like
  • And don't forget the guy currently living in the White House also lives inside the pocket of Goldman Sachs.

     

    http://bit.ly/HmPaKQ
    18 Sep 2012, 05:41 AM Reply Like
  • The real "Shock and Awe" will come with this Keynesian version of Trickle Down Economics fails.
    17 Sep 2012, 10:06 PM Reply Like
  • 40 Solyndras a month of borrowed money to pay for bad investments. Who is running this country?
    18 Sep 2012, 05:54 AM Reply Like
  • When will we be willing to take our medicine and accept lower standards of living? When will we admit that borrowed or printed money does not equal prosperity?
    18 Sep 2012, 08:29 AM Reply Like
DJIA (DIA) S&P 500 (SPY)