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personally, i dont thinkt he fed has become political (like those at CNBC who state the bush should command bernanke to come to the oval office to have a "discussion" about whats going on lol).

greenspan sure hurt markets when he foresaw a rise in inflation and hiked interest rates in 1994 (was a surprise).

why precisely do you think the fed can't "stomach keeping rates high"?


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The Greenspan/Clinton era was the anomaly, I think. Greenspan was an Ayn Rand reader, and didn't agree with any liberal leanings Clinton had. He didn't particularly want to make Clinton look good. On the other side, Clinton was afraid of Greenspan and couldn't/wouldn't do anything to control, influence, or even cross him. It was the perfect match for Greenspan to act in the long-term interest of the economy.

When I am referring to the Fed and rates I am only referring to the rates that they control, which I would expect to see cut and then cut again. I'm gathering from your post that you think it will only happen with sufficient evidence. I am saying that however they evaluate the evidence, there has to be a borderline case. And in that borderline case, they will tend to err to the side of a cut. And sometimes people wear special glasses that make borderline cases look not-so-borderline.

Bernanke got his job due to people in the Bush administration and I think there is some loyalty there to do things that will make the economy look good in the short term. Especially as the 2008 election starts to get closer.