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Monday, June 12, 2006

Guessing Games: The Fed and the Markets

In recent weeks, since the accession of Ben Bernanke to the Federal Reserve chairmanship, the stock market has bobbed up and down like a yo-yo as the Fed attempts to guess whether we face inflation or an incipient recession, and stock traders try to guess whether the Fed will continue to raise the discount rate.  We shouldn’t be surprised that a group of bureaucrats can’t manage the world’s largest economy.