Talking It Up

After the market closed, Bernanke spoke:

*BERNANKE: ‘TOO EARLY’ TO SAY U.S. ‘WEATHERED FISCAL’ RESTRAINT
*BERNANKE SAYS INFLATION, JOBS SIGNAL MORE FED STIMULUS NEEDED

Let’s be clear – to the cargo cult, there is no such thing as enough spending. There has been no “fiscal restraint” – the so-called sequester hasn’t actually started yet. But if the cargo cult fails to deliver, it is because someone else didn’t do “enough.” As if they could.

Anyway, stocks – and bonds – are soaring. UFB. Bernanke has basically taken back everything he said about tapering.

“And I guess the final thing I would say in terms of risks of course is that we have seen some tightening of financial conditions, and that if, as I’ve said and as I said in my press conference and other places that if financial conditions were to tighten to the extent that they jeopardize the achievement of our inflation and employment objectives then we would have to push back against that.”

The market will now understand that he is completely trapped, there is no way out for Mr B. He is not in control of monetary policy, the market is. So be it. Got bonds?

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