Getting fed up with Fed.

When Ben Bernanke assumed his new position as Chairman of the Board of Governors of the Federal Reserve, finally replacing everlasting Alan Greenspan, I thought he would focus on economics instead of politics.

Greenspan, “The Marionette,” was too tied up by the political strings to think economics. He was the one who created multiple bubbles and is responsible for the current collapse of the US financial system.

Yet, it looks like Bernanke didn’t learn from the mistakes of his predecessor. Cheap money is like a drug and until everything in the house is destroyed by the fire, the drug addict won’t lift finger to fight the fire.

Either influenced by Bush and the upcoming election (oh, that “election year effect”), bowing to the overwhelming power of stock market, or panicking under the pressure of practical problems, Ben Bernanke is creating two monsters in place of one. By lowering the Fed’s benchmark interest rate to 2 percent in April of 2008 (the Fed reduced the rate seven times from 5.25 in September of 2007) and keeping it there, Bernanke is navigating the “US economy” ship right into the strait between Scilla and Haribda (two mountain-crushing ships in Homer’s Odyssey) – slowing economy and rising inflation.

For my taste, I’d prefer to fight with one enemy at a time. Moreover, fast surgery and afterwards recovery of the cancerous economy also looks preferable to a slow chemical and radiation treatment, chosen by Ben.

Of course, one might say that I don’t have the credentials he has. Well, I do have B.S. in Economics (my USSR education) and M.S. in Mathematics in Finance (American edition). In addition to it, I have a very strong intuition, which was summarized by my NYU professor:

QUOTE
“I am often astounded how Anjelina always arrives at the correct answer, through peculiar methods.”
Jonathan Goodman, Professor of Mathematics, Courant Institute, NYU, Director of the M.S. Program in Mathematics in Finance in 1999-2000

As such, my preference to increase interest rates and restrain inflation, is in line with the Dallas Fed President Richard Fisher, who dissented for a fifth time this year. And believe me, this has nothing to do with his name being close to Robert Fischer (famous American 11th World Champion), but have everything to do with the reasons I described above.