Sometimes it seems we might all be better off if current Federal Reserve Chairman Ben Bernanke were more like former Fed Chief Alan Greenspan.
Recall that traders and investors were often left scratching their heads after listening to what Greenspan had to say and, as some suspected back then, the disgraced former Fed Chief really didn’t know himself what he was trying to communicate much of the time. Markets were left to figure things out on their own and they did a pretty decent job of it, that is, up until the central bank inflated one too many asset bubbles about a decade ago.
Ben Bernanke, on the other hand, has taken great pains to improve the Fed’s communication strategy. It seemed to be working right up until May when the subject of “tapering” their $85 billion per month money printing effort became central to the discussion.
Since then it’s been an unmitigated disaster in many areas, the notable exception being U.S. stocks, as markets have been roiled by hawkish talk followed by dovish comments. The latest example of this came yesterday when Bernanke unwittingly boosted the price of most assets, notably gold that has now seen its sharpest move higher in two months, though the Fed Chairman didn’t really say anything new.
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