The Federal Reserve, particularly its current chairman, has received fairly a bit of criticism for its performance during the final several months in dealing with the profitable turmoil in the markets. The primary complaint is that the Fed is behind the curve in dealing with the profitable slowdown. The other major criticism is that the Fed is sending out conflicting signals, which are causing dangerous confusion in the market.

With regard to the first point regarding Fed actions, it remains to be seen whether the Fed is behind the curve. Alan Greenspan once said that the Fed cannot prevent bubbles but can help to cushion the profitable fallout.

Although there were recessions under Dr. Greenspan’s watch, they were in general milder than those under preceding Fed chairmen. Dr. Bernanke may be in a similar situation. Only duration will tell whether he is as effective as Dr. Greenspan was. We must all remember that Wall Street has its own set reasons for desiring easier monetary policy by the Fed which may be linked to its own self-interest.

Continue reading The dangerous potential of the Bernanke Put!

Original post by Douglas S. Roberts

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