Doubts grow over wisdom of Ben Bernanke ‘super-put’
The early verdict is in on the US Federal Reserve’s $600bn of fresh money through quantitative easing. Yields on 30-year Treasury bonds jumped 20 basis points to 4.07pc.
By Ambrose Evans-Pritchard
04 Nov 2010
It is the clearest warning shot to date that global investors will not tolerate Ben Bernanke’s openly-declared policy of generating inflation for much longer.
Soaring bourses may have stolen the headlines, but equities are rising for an unhealthy reason: because they are a safer asset class than bonds at the start of an inflationary credit cycle.
Meanwhile, the price of US crude oil jumped $2.5 a barrel to $87. It is up 20pc since markets first concluded in early September that ‘QE2’ was a done deal.
This amounts to a tax on US consumers, transferring US income to Mid-East petro-powers. Copper has behaved in much the same way. So have sugar, soya, and cotton.
The dollar plunged yet again. That may have been the Fed’s the unstated purpose. If so, Washington has angered the world’s rising powers and prompted a reaction with far-reaching strategic consequences.