The latest round of quantitative easing has been controversial to say the least. However, the market reaction, post 60 minutes interview, has not exactly been what the Bond Market had anticipated. One could question whether the selloff of the last month has been related to recent strength in the U.S. Economy, or whether it is related to the overreaching on the part of the Federal Reserve. What is most interesting however has been the reaction by Fed officials regarding this rise in rates. Correct me if I am wrong, but Bernanke specifically spoke of the beneficial effect of lower rates on capital spending and hiring. When asked yesterday about the backup in rates, he simply stated that “our policies have contributed to a stronger stock market just as they did in March 2009 when we did the first iteration of this program”. It would appear that the Fed is unclear as to what the real benefits of money printing are, but they will agree that it is either lower rates or higher stock prices. It is anyones guess as to what the real long term economic benefits are of either. Is anyone to believe that the same Fed who cannot discern a real target for this operation will also be able to discern when it is time to turn the printing presses off.