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IN CASE YOU DIDN’T ALREADY THINK THE FED WAS CLUELESS….

I’ve long surmised that Ben Bernanke truly has no grasp of the current situation, but this latest action takes things a step further.  According to Bloomberg News the Fed has been sending a survey out to the 18 Primary Dealers asking them how much quantitative easing they would like to see:

“The Federal Reserve asked bond dealers and investors for projections of central bank asset purchases over the next six months, along with the likely effect on yields, as it seeks to gauge the possible impact of new efforts to spur growth.

The New York Fed survey, obtained by Bloomberg News, asks about expectations for the initial size of any new program of debt purchases and the time over which it would be completed. It also asks firms how often they anticipate the Fed will re- evaluate the program, and to estimate its ultimate size.”

This is almost surreal.  It’s great that they’re in such close communication with the dealers.  And that shouldn’t really come as any surprise, but the Fed isn’t even dictating the terms here any longer.  One of the primary goals of QE is to set expectations – not respond to them.  You have to wonder if Mr. Bernanke has any grasp of what he is doing.

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