Portfolio Response to Certainty

14 Dec

Unbelievable 60 minutes interview with the alleged custodian of the world’s reserve currency.  Not sure whether the Chinese were watching, but you can be sure that they were dumbstruck as to some of the responses given by the Fed Chairman.  The most egregious, in my mind, was the response given to the question: What is your confidence level  that you will be able to withdraw the excess reserves when they are no longer needed? His response was that he was “100% confident” that they will be able to ascertain when the correct time to do so will be and that they will be able to do so quite quickly-mainly because they have thought about this a lot and studied it every which way.  This response came in spite of his answer to the question ” How did the Fed not anticipate the crisis” to which he stated that they missed it because much of what happened occurred outside the oversight of the Fed.  Thus the response to outside criticism, on the part of the Fed, to an untested, unproven, and unnecessary Fed policy action is to steel their resolve and certitude even more as to its effectiveness.  Oh, and by the way, if QE2 does not work, get ready for QE3.  This comes at the same time as Euro leaders question the viability of a QE type experiment of their own.  What becomes absolutely clear from all of this is that one needs to protect oneself from the folly of all fiat currencies which means a move toward hard assets in whatever form is most appropriate to ones portfolio

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