Bernanke thinks he is the Savior

A lot of good things have happened since January 2009.  The Fed kept interest rates low and the Administration got a little stimulus going.  These steps averted the Great Depression II.  Ben’s worry no doubt, is that the expected Republicans gains in Congress will ignite for real the Great Depression II.  He knows that the reason that the economy has just stopped going down and has not started up is because of the “Do Nothing” posture of Republicans along with some conservative Democrats.  There have been some big missed opportunities, see Friedmans article in yesterdays NYT  http://www.nytimes.com/2010/10/10/opinion/10friedman.html  .

I think what evolves is that Ben truly believes that if the Republicans get in and try to stop all forward movement on the Fiscal side that the Fed will have to step in as the “Savior” of the economy.  All the  talk of QE 2 is part of the testing of reactions to his Savior role. 

Bottomline is the election results. If there are big Republican gains, QE 2 will be on the table and the only result will be the massive inflation that the market is hinting at the moment. 

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