Can we be Fed Sage? A reflection.
Two interesting contrasts:
Markets were hanging on for every nuance ahead of Ben Bernanke’s key speech for hints of further stimulus when the Federal Reserve chairman talked to the annual central bankers’ gathering at Jackson Hole, Wyoming. A sentimental attachment to last year, perhaps, where QE of $600bn (£368bn) followed.
Now, we should ask ourselves where the fate of nations really resides. Is it more relevant to tinker with the big numbers or to put value and intellectual effort into the real economy? This presupposes that governments, of whichever quarter, can really control events; except by not borrowing, of course. However, a healthy and vibrant micro economy, at business level, is the best bedrock for national fortunes.
A troubling coda to the Sage’s endeavours is the notion of “de-facto lender of last resort” mooted by Kathleen Brooks of Forex.com an idea not to be spoken of within earshot of politicians anywhere. Governments must look after economies and preferably spend less! Corporations will get it wrong from time to time, of course, but that is as far as Mr Buffet should go.