Bernanke is getting ready to vacate his position. Apparently Janet Yellen is dumb enough to replace him, although that is not yet confirmed. What kind of a person steps in front of a speeding train when there is nothing that can be done to stop it?
The Federal Reserve has no plans to exit. It is not possible based on simple economic observation. Even Mr. Bernanke agrees:
“I don’t think the Fed can get interest rates up very much, because the economy is weak, inflation rates are low,” Bernanke told the House Financial Services Committee.
“If we were to tighten policy, the economy would tank.”
By my count we are now in our fifth “Recovery Summer.” Of course this summer is no different than the previous four. There is no recovery, there can be no recovery and there will be no recovery.
The Fed has no way to reverse the expansion in its balance sheet. Nor does the government have the means to service its debt and promises. All that the Fed has achieved is to extend the terminal patient’s life by providing life support. Once the plug is pulled, the patient dies. The economy, the financial system and government’s ability to pay its bills will die simultaneously.
Yes, it is that simple. Nothing can be done to avoid this fate! We are too deep into an economic death spiral.