In an interview on CNBC, John Boehner, Speaker of the United States House of Representatives, accused Federal Reserve
chairman Ben Bernanke of generating the market sell-off.
In fact, Mr. Boehner actually should’ve thanked Bernanke for the stock market rally that drove the Dow and S&P 500 to record highs. It was only because of the Federal Reserve’s easy monetary policy that stocks were able to climb so rapidly despite a somewhat sluggish economy.
And there’s still no definite date to cut the bond stimulus; in order for the stimulus to end, the economy will need to drive higher in its recovery and the unemployment rate will need to fall to seven percent.
It’s not a sure bet that the Federal Reserve’s plan will ever come to fruition. There’s also an assumption by the Federal Reserve that the U.S. economy will ratchet higher.