Reactions to the Fed Are Again Overdone

 | Apr 03, 2012 | 3:47 PM EDT
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Wouldn't it be great if the people who wanted QE3, the people who want more money printed by the Fed, simply disappeared from our firmament and stopped trading or investing or scalping or flipping? Wouldn't it be terrific if they simply left the building?

The virulent reaction to the entirely logical statements from the Fed -- that if things get better they won't need to do anything more to help the economy -- betrays a shockingly obtuse analysis.

The Fed wants to put lighter fluid on the Kingsford charcoal briquettes and watch them. If the coals catch fire, it doesn't desire to throw more lighter fluid on the barbecue than you would if you were in charge of the operation.

Not only that, but we want the coals to catch fire on their own. We are reluctant to hire -- the Fed's goal now -- if we think that the Fed is still worried that the fire will go out, and we will be stuck with uncooked hamburgers and hot dogs. We don't want to be chowing down on pink slime!

I get the gold drop. It's inherently deflationary to stop printing money, and that means you want to lay off gold. But there's a ton of reasons to buy gold beyond our Fed, as it is truly an international currency. That, however, is way too logical for this tape.

Now, when the selling occurs, the thesis follows on top of it. How can the Fed not want to do QE3 when employment is still so anemic? How about the higher tax rates coming? Is the Fed oblivious to Spain? Do the members of the Fed do nothing but ride around in limos or take public transit? Have they not lifted a nozzle lately while the digital dollars clicked by?

So the selling goes on, no doubt followed by the "Is this the beginning of something big?" chatter that is part of the media playbook. Is it ever "Here's the chance to get in"? Why is the market always regarded as the equivalent of a burning building?

Unfortunately, that's how it plays out.

I just don't feel like being a part of it.


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