The information within this article concerning Financial Markets is for informational purposes and do constitute a strong advise to sell securities. This article contains all you need to know about price movements on fixed rates, stock indices, minerals (oil, precious metals, and base metals) for the next 3 weeks.
Risk management involves judgment as well as science, and the science is based on the past behavior of markets, which is not an infallible guide to the future.
Chairman Ben S. Bernanke
At the Federal Reserve Bank of Kansas City Economic Symposium,
Jackson Hole, Wyoming
August 27th, 2010
Presents a list of policy options which have or already been used with dismal results or not even plausible.
Note: for those not familiar with the Fed eggheads lingo in
"Market expectations for continued accommodative policy have in turn helped reduce interest rates on a range of short- and medium-term financial instruments to quite low levels, indeed not far above the zero lower bound on nominal interest rates in many cases."
"Zero lower bound on nominal interest rates" means "Keynes' Liquidity Trap".
Try that Google Search
What you must know is that the Zero Lower Bound is for 0% short-term interest rate and obviously, as my option model proves, it is higher for long-term yields. So we are not "not far above" but "far below."
Of course when you replace "Zero lower bound on nominal interest rates" by "Keynes' Liquidity Trap" it gets a lot more freaky!
My estimate of the use of that syntax is that it make it less frightening and you will not find on Bing or Google the amount of research the Federal Reserve System did on the subject since 1994.
Bernanke Says Fed Will Do 'All It Can' to Ensure U.S. Recovery
I am sure "It will do all it can" - the problem is I am also sure it can't do anything!
Market expectations for continued accommodative policy have in turn helped reduce interest rates on a range of short- and medium-term financial instruments to quite low levels, indeed not far above the zero lower bound on nominal interest rates in many cases.
"The issue at this stage is not whether we have the tools to help support economic activity and guard against disinflation. We do. As I will discuss next, the issue is instead whether, at any given juncture, the benefits of each tool, in terms of additional stimulus, outweigh the associated costs or risks of using the tool."
The burden of proof is on him and he didn't describe specific and credible tools. In the meantime I have proved that none of the tools he and his eggheads have envisioned work.
Even if the Fed did the "unexpected," buy stocks to avert a crash, it would be met with a resounding failure:
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