|Fed Reserve Chairman Ben Bernanke|
|The Federal Reserve Bank has an impressive facade.|
|The team of Fast Money talking the taper. When will it rear its ugly head?|
Stocks will drop the day it does, but they'll recover. And any drop in stock
prices is just a chance to buy more. It means everything's on sale. And I
love a good sale.
I didn't drown. I haven't lost my savings. In fact, my liquid assets have increased by quite a bit in five months with some shrewd investing that I did all by myself (I paid no financial advisor and I suppose I think I'm smart enough to be my own advisor).
Color me optimistic, but I don't think the U.S. economy is going to crash again for a long time. I encourage all of you that are afraid to invest to grow some balls and put some money in the stock market, whether you choose to do it through your 401K, a 457, a Roth IRA, or through the purchase of a mutual fund or carefully chosen equities. With the Federal Reserve pumping money into the economy, I think it's immune from crashing (unless the government defaults on its debt at which point we're all screwed whether or not you have stocks). And it won't last forever so ride the gravy train while you can. Sure, there will be setbacks, there will be pullbacks, and not every day is rosy on Wall Street. But if you invest for the long term (years and years) then you will reap the rewards. It's better than sitting back and watching your savings account devalue in front of your eyes. I have to say, I was sick and tired of doing that.
In retrospect, I think Ben Bernanke has been an astounding chairman for the Federal Reserve given the challenges he's faced. I think he was truly looking out for the middle class, no matter what people say about him. Sure, QE may not have worked like he intended and that's mostly because the middle class is so underrepresented in the stock market. But I have to ask myself, what other than that could the Fed have done to help the middle class? The economy is a tricky devil, and just handing out money to families might have made them put it into savings. For an economy to pull itself out of recession, there needs to be spending and not hoarding. The complexity of it sometimes boggles my mind, and I understand why there are people whose entire career is spent to try and understand the idea of money.
|Will Obama nominate Janet Yellen for the job of Fed Chair? If he does, Janet|
will become the first woman in history to sit in the esteemed position. That
in itself is very exciting. I think she'll do a fine job.
Five years ago Wednesday, when I was the speaker, I gathered the other Democratic House leaders in my office to discuss the latest financial news. I told them that, as a matter of course, Treasury Secretary Henry Paulson briefed me on the state of the markets and the financial system, but had not done so that week.
In that time, Lehman Bros. had filed for bankruptcy; Merrill Lynch had faced failure and had been purchased by Bank of America; and, two days earlier, AIG had survived only after a Federal Reserve bailout.
After the meeting at 3 p.m., I placed a call to Secretary Paulson and asked him to come the next morning to brief the leadership. Then came his stunning response: "Madam Speaker, tomorrow morning will be too late."My conservative friends, say what you will about Nancy Pelosi, but you have to admit that hearing that on the other end of the phone would be absolutely chilling. And of course, you know what followed. Congressional hearings around the clock and emergency measures to approve a trillion dollars in stimulus money because all the facts said that if the U.S. didn't do this, capitalism WOULD HAVE DIED. Our entire financial system would be in shambles. Every single one of us, red and blue, would be destitute. Children would have no future.
|Billionaire investor Warren Buffett|
"The Fed is the greatest hedge fund in history," Buffett told students at Georgetown University. "It's generating US$90 billion a year in revenue for the U.S. government and that wasn't the case a few years ago."Yes, you heard that right. The math doesn't lie. QE is actually GENERATING MONEY. A LOT of money. How is the Fed doing that? Answer: tons and tons of bonds. Yes, all that bond buying they are doing to stimulate the economy that comes under heavy criticism that the Fed is borrowing from your children's future is wrong. They are INVESTING in your children's future. All of those bonds are increasing in value and paying the government back. In fact, QE may not cost this country a cent if you look at it from a certain point of view. It will make this country money. Neat, right?
It's been five years since Lehman Brothers went belly up, and I'm writing this post to thank Ben Bernanke. I think you've done a wonderful job. I don't care what the critics say. You've made me money, and in a time where scraping by is hard, that makes you a hero in my book. May your retirement from the Federal Reserve be filled with joy.
Today, I'm being interviewed over at Yolanda's blog Defending the Pen. Have a great weekend.