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What if the Fed is beating a donkey (an economy with 1% growth potential) for not being a horse...

What if the Fed is beating a donkey (an economy with 1% growth potential) for not being a horse (3% growth), writes Jeremy Grantham, wondering if the man (Bernanke) who missed the greatest macro event of our lives is also making an incorrect assumption about the economy. "Fine-tuning economic growth ... is hardly likely to get any easier by badly overstating trend-line growth ... The Fed will keep trying to whack the donkey for far too long."
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  • whidbey
    , contributor
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    Grantham is so good on the obvious. Bernanke is no idiot (just a grandstander); he has almost admitted (not quite) that he was between a rock and a hard place. He does not know what else could have been done other than to take the risk his QE will be found exorbitant. And, what if he does not know how to unwind his good deed. He pleads "Congress made me do it". Not much of a defense, but just enough to avoid full blame. Yes Jeremy, it is a fine mess, and the lies are plentiful, so investors need to be very careful even with Emerging Markets. They export you know, that means fewer buyers in developed countries will want their exports. Stay 50% cash.
    7 Feb 2013, 11:40 AM Reply Like
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