After Chairman Bernanke’s first-ever, post-policy meeting press conference, those of us dealing with this downward spiral have not gained any new insights. Bernanke stated that the country was improving and they were seeing a “moderate” increase in overall production, while employment still lags. If you come from the liberty side of the aisle, you know we could have predicted the outcome of the Fed’s master QE2 plan and its execution, however for the mainstream media and the Fed themselves, we had to figure it would take a minute for them to catch up to reality. In an article following the inaugural press conference of a FOMC meeting, the Wall Street Journal decided to take a closer look at QE2 and its overall achievement. Bernanke clearly wasn’t very convincing in his speech because the Journal is hot on his trail:
It’s worth looking at the mechanisms involved. QE entails buying government bonds and thus driving down longer-dated yields. Low benchmark yields force investors to seek better returns elsewhere and thus migrate to equities and corporate credit. At the same time, expectations the central bank will achieve what it’s set out to, in other words, a recovery, lends further support to share prices.