Posted At : February 15, 2010 11:22 AM
This morning Ben Bernanke announced that the Federal Reserve may begin raising the discount rate. He went out of his way to say that it was not the beginning of a trend towards monetary tightening. Although on the surface this move looks calculated and reasonable, the thought of a tightening of monetary policy would be a cause of serious concern. In 1937, the Fed felt that all was back to normal and started raising rates. This proved to be severely premature and ultimately catastrophic as the stock market then fell an additional 49.1%. It didn’t recover until 1954. When rates start rising, I want to be out of the market.
Regards – Keith Springer