Markets Go Wild As Ben Bernanke May Have Just Reference His "Helicopter Ben" Speech
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To the surprise of many, markets are higher despite the fact that Federal Reserve Chairman Ben Bernanke didn't announce additional easing measures at Jackson Hole, as some had hoped for. Interestingly, gold is also higher.
While market participants aren't complaining with the rally, it is a bit puzzling. So what gives?
Here are two thoughts.
1. In the conclusion of Bernanke's speech he seems to have referenced his "helicopter Ben" speech.
"Early in my tenure as a member of the Board of Governors, I gave a speech that considered options for monetary policy when the short-term policy interest rate is close to its effective lower bound."
While the footnote (31) references a speech in May of 2003 - "Some Thoughts on Monetary Policy in Japan," it is the November 21, 2002 'helicopter' speech that it looks like Bernanke was talking about - Deflation: Making Sure "It" Doesn't Happen Here.
In this 'helicopter' speech, in addition to discussing Milton Friedman's famous "helicopter drop" of money, he discusses other courses of action the Fed can use when rates are 'zero bound' - where they have been for years. This speech has been studied as a playbook of Bernanke's unconventional monetary policy moves.
The reference to the old speech could suggest Mr. Bernanke is going back to the well and will come up with some newfangled method to spur growth. Think a money-financed tax cut, which Bernanke said in that past speech is, "essentially equivalent to Milton Friedman's famous "helicopter drop" of money."
2. The second thought is simple. QE hasn't been working much lately, so if the economy is really improving by itself and the Fed can hold off this is a positive.
At last check the Dow is up 110, the Nasdaq is up 16 and the S&P 500 is up 8. GLD is up 1%
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While market participants aren't complaining with the rally, it is a bit puzzling. So what gives?
Here are two thoughts.
1. In the conclusion of Bernanke's speech he seems to have referenced his "helicopter Ben" speech.
"Early in my tenure as a member of the Board of Governors, I gave a speech that considered options for monetary policy when the short-term policy interest rate is close to its effective lower bound."
While the footnote (31) references a speech in May of 2003 - "Some Thoughts on Monetary Policy in Japan," it is the November 21, 2002 'helicopter' speech that it looks like Bernanke was talking about - Deflation: Making Sure "It" Doesn't Happen Here.
In this 'helicopter' speech, in addition to discussing Milton Friedman's famous "helicopter drop" of money, he discusses other courses of action the Fed can use when rates are 'zero bound' - where they have been for years. This speech has been studied as a playbook of Bernanke's unconventional monetary policy moves.
The reference to the old speech could suggest Mr. Bernanke is going back to the well and will come up with some newfangled method to spur growth. Think a money-financed tax cut, which Bernanke said in that past speech is, "essentially equivalent to Milton Friedman's famous "helicopter drop" of money."
2. The second thought is simple. QE hasn't been working much lately, so if the economy is really improving by itself and the Fed can hold off this is a positive.
At last check the Dow is up 110, the Nasdaq is up 16 and the S&P 500 is up 8. GLD is up 1%
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Bernanke
TraderX on Aug 31, 2012 11:24 AMMark as Spam | Reply to this comment
BTFD, BTFD, BTFD!!!!!!!