Senators, we find ourselves in a very challenging situation.
Following the dot com implosion, my predecessor at the Fed slashed rates to a generational low of 1%; the FOMC then kept rates at 1% for over a year.
While that re-inflated the economy, it also set off a shock wave of inflation unseen since the 1970s. Houses doubled in price, Oil is up 5 fold, food stuffs have tripled, and the dollar has collapsed. Gold is at multi-decade highs.
As always happens, these price increases in hard assets attracted speculators, and that made the situation -- especially in housing -- much more complex. Even worse, the housing speculation contributed to a debacle, while these other assets are actually accelerating in price....
the funny thing is that wallstreet already knows the truth...its mainstreet that would panic if bernanke told the truth.
i still hold on to my well documented belief that the fed killed the housing bubble on purpose. if they can get through this burst without a bad recession, the fed wins imho.
Relax and be happy.
