IT'S BEN BERNANKE'S economy, and everyone else . . .
. . . is along for the ride.
. . . .
. . . . The biggest question about the Fed's policy of near-zero interest rates and unlimited quantitative easing has always been: What happens when the music stops?
Mr. Bernanke's answer is that the Fed has the "tools" to unwind, and it will use them when the economy is healthy enough. . . .
But as the central-banking proverb holds, it is easier to get on the bull than to get off. The eternal questions are timing and political will. . . .
. . . .
The Fed can't repeal ObamaCare, which is a deadweight burden on job creation. It can't repal the tax increases that hit in January, notably on small businesses. And it can't repeal the waves of new regulation that the Obama Administration continues to impose across the economy. The miracle is that growth is as strong as it is, which speaks to the private innovation that continues to take place in energy, biotech, digital devices, big data and more.
Meanwhile, the longer [quantative easing] and near-zero rates continue, the more risks accumulate. The longer investors scramble for yield, the greater the risks of misallocated capital and bubbles we may not see until it is too late. Savers have been punished for a half decade already, while low-interest rates have made it easier for politicians to spend with too little consequence.
(Editorial, "Bernanke Rides the Bull," wsj.com, June 19, 2013)
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