By Dan Denning, Daily Reckoning.com.au:
Yes. Today’s Daily Reckoning will have to digest the drivel and bunkum dished out by US Federal Reserve Chairman Ben Bernanke. The Fed head spoke in front of the Senate Banking Committee in Washington DC. Mesmerised zombies everywhere hung on his every word for clues about when the next round of free money will be injected into the rotting corpse of the financial markets. Aussie share markets will react to this.
How can anyone possibly take Ben Bernanke seriously? He told the Senate Banking Committee that the Fed’s unconventional policies have been, ‘effective in easing financial conditions and promoting strength in the economy,’ and that, ‘Large-scale asset purchases have also contributed to economic growth.’ He added that the Fed is ‘prepared to take further action as appropriate to promote a stronger economic recovery.’
Bernanke still subscribes to the view that if you make credit cheaper, you’ll boost economic growth. As far as we could tell, he provided absolutely no proof that the Fed’s purchase of US Treasury bonds and mortgage bonds in QE1 and QE2 did anything to promote growth in the real economy. All he’s done is boost stock prices and make it easier for the US government to finance its deficits.