Posted by WARREN MOSLER on September 21st, 2011
I thought the path of least resistance was for the Fed to not do anything,
on the grounds the economy was improving sequentially,
core was still up a bit, etc.
and thereby support positive expectations for modest growth
And that if they did anything to try to help they’d be signaling the economy needed help
which would cause concern that the economy was bad enough
for the Fed to try to do something to help.
So that’s what happened.
The Fed made a positive gesture,
indicating it was trying to help,
which signaled they think the economy needs the help.
So stocks sold off and bonds went down in yield.
But also as previously suggested,
it will soon wear off and be forgotten,
with the only lingering memory being their isn’t much the Fed can actually do to help.