Obama and Bernanke engaged in destructive, economic magic tricks to save their jobs?
Stanford PhD candidate in Political Science Lucas Puente tweeted the below graph out just now. The left Y-axis is the S&P 500 and the right Y-axis is the Intrade % chance Obama gets re-elected. Superimposed in the graph are the two major events where central bankers (the US Federal Reserve and the European Central Bank) pumped liquidity into the market. Basically the major US and European Central Banks are artificially inflating the asset prices in securities markets like the S&P 500. Although they are doing this to ease credit crunches globally and hopefully stimulate economic growth it has the “coincidental” benefit of creating a “wealth effect” among US voters whose 401ks and investments are seeing a precipitous rise in value thanks to these central bank actions. Suddenly pocketbook issues don’t weight as heavily on American’s minds as they did a month ago and voters view on Obama’s handling on the economy improves along with it? Hmmmmmmm
Of course, you’re seeing the impact at the grocery store and gas station even more now. Making 401(k)s and other investments look more than what they are really worth is a pretty dastardly attempt to fool the American public. Screwing the working masses by decreasing their cash even further on their monthly budgets to save your jobs is the epitome of selfish, criminal, Machiavellianism.
Charles Plosser poured some cold water in a dissenting statement that brought the markets back to reality. No doubt he got an angry call from Bernanke and from people in Chicago.