This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Fed Action Looks Increasingly Futile

Oh, and one more thing: Bernanke should admit total failure soon. The stronger wording in Wednesday's FOMC announcement calling for fiscal support is significant. It signals the increasing frustration from the Fed on the continuing lack of fiscal accommodation, e.g., more borrowing, to accompany the monetary accommodation. And herein, not Keynesian policies as often criticized in certain circles, lies the Fed's mistake.

Keynesian economists have long proposed numerous variations of a helicopter dropping cash. And it would've been much more effective in stoking inflation than the pretentious, tedious QE. There's only one technical problem that Keynesians forget: the political will of the society in maintaining some semblance of social fairness prohibits such academically perfect solutions.


In other words, Americans want to avoid borrowing more from our children if we can help it. We actually want to be responsible in our own finances! Keynesians failed to understand this simple albeit irrational psyche. And because of this, they're doomed to fail in disgrace.

And, speaking of the new BoJ, I was baffled by the talk of early exit from multiple Fed governors and the media earlier in the year. Even if one believed in the strong recovery story, wouldn't it have been premature for Fed governors to say things that would surely cause so much concern in the market?

Now, in retrospect, I see such talks were clearly prompted by "Abenomics" (for Japan Prime Minister Shinzo Abe). The outright money-printing -- increasing base money instead of mere, timid QE -- by the new BoJ, as enthusiastically endorsed by Bernanke, has tremendously complicated and therefore eroded the Fed's control in inflation in the U.S.

Whereas the Fed could supply liquidity with abandon before, knowing that inflation would be exported and become somebody else's problem, now the yen tsunami is coming ashore.

With privileged early access to data, some Fed governors must have been alarmed by the new trend and became worried about the implication in inflation and Fed exit. The irony is bittersweet.

As to the market, it's becoming increasingly clear that the worldwide economy is once again slowing down. Even in Japan, antagonists to the Abe approach are becoming more visible, as reported by Bloomberg. And Wednesday's market reaction, or rather lack thereof, to the FOMC shows unusual negative sentiment and apathy toward the Fed not seen since 2009. This could be a significant turning point.

Stock quotes in this article: GLD, SPY, TLT, ADP 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs