The Omnipotence Of Central Banks (Not)

In his speech yesterday, Fed Chairman Bernanke made it abundantly clear (if it wasn’t already) that the objective of his bond market interventions was to raise share and house prices. He believes that doing so will boost consumption and ultimately employment.

The BoJ believed this too, and even went much further than Bernanke, in the sense that the BoJ’s QEx extended to shares, directly and through ETFs, as well as bonds. In the stock market, they were called PMOs – Price Maintenance Operations. This did not work. The Nikkei index closed last night at about 22% of its December, 1989 peak. Real estate prices (as of 2011) are down 60% from their peak. And by the way, consumer prices in Japan are still deflating. But now Japan is hitting the wall with sovereign debt of over 200% of GDP.

Why are these idiots allowed to repeat the obvious mistakes of their peers?

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