Friday, April 30, 2010

An Ease Too Far?

The latest offering from the "Calafia Beach Pundit" points to gold as one of the indicators showing that inflation, benign for the last ten years, is more likely to go up than down. Handcapping Obama's three choices for the Fed Board of Governors, he says that they're all going to be inflation doves:
Obama's choice of three new Fed governors does little to reassure investors that the Fed will ever pay more attention to the value of the dollar than it does to the health of the economy. Indeed, all three picks promise to be firmly in the "dovish" camp when it comes to the hardest choice any central banker has to face: whether to tighten to defend the value of its currency, or to ease to support the economy.
He notes at the end that it isn't just the Fed that has turned on the spigots to high; it's a global phenomenon.

He doesn't come out and say it, but he seems to think that the Bernanke Fed has made the same mistake as the Greenspan Fed did in '03: leaving rates low for too long.

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