taper

Larry Summers and Keynesians love bubbles

The market is eagerly awaiting the last FOMC meeting of 2013. Will they taper or not taper? I highly doubt that Ben Bernanke will be the Grinch and choose to taper in his last Fed meeting. However even if he does, it is a few months overdue.

Larry Summers was President Obama's favorite to replace Fed Chairman Ben Bernanke. Even though Summers ended up bowing out, it is important to listen to his recent IMF Research Conference speech because his Keynesian view is very much in line with incoming Fed Chair Janet Yellen, ECB President Mario Draghi and Japan's Shinzo Abe. The simple conclusion is easy monetary policy, quantitative easing and zero interest rate policy will likely be with us for a very long time. Bubbles, crashes and more bubbles are going to be our future. This type of environment is going to be especially rough for traditional buy and hold investors.

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3 Reasons Not to Fear the Taper

Ever since Ben Bernanke mentioned tapering, investors have been worried about the implications on their portfolios.

S & p 500

When you look at the chart above, there is no question that the stock market has been a beneficiary of Bernanke's massive expansion of the Fed balance sheet. When QE1 and QE2 ended, the stock market violently reacted to the downside. Now just the mention of tapering has many participants shaking in their boots. Should you be worried?

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