Bernanke Talks and the Currency Market Listens

Fed chairman Ben Bernanke is at odds with Brazil, China, and even the IMF over his policies. Please consider the BBC report Bernanke defends Federal Reserve stimulus measures Brazil has said US monetary easing to keep interest rates low and weaken the dollar has hurt emerging economies. And International Monetary Fund chief Christine Lagarde warned on Sunday of consequent asset bubbles developing in emerging nations.

WASHINGTON — Federal Reserve Chairman Ben Bernanke strongly defended the U.S. central bank’s bond-buying stimulus before Congress on Tuesday, saying its benefits clearly exceed possible costs. The Fed chairman also urged lawmakers to avoid sharp spending cuts set to go into effect on Friday, which he warned could combine with earlier tax increases to create a “significant headwind” for the economic recovery.

Ralph Shell submits: Perhaps the Bank of Japan officials should get together with Fed Chairman Bernanke for guidance how to weaken their yen. Concerned with deflation at home, and a strong yen hurting their exports and economic recovery, the Bank of Japan announced some new programs. The interest rate has been reduced to practically nothing, money is readily available to lend, and yes the BOJ is going to increase the money supply with a dose of quantitative easing.

Soos Global Capital submits:This article is best read as a supplement to my article entitled “Why I’m Concerned About a Near Term Pullback in Stock Prices”, an article on related topics that was published last week.