Surging liquidity, more risk on the balance sheets of banks and insurers, sky-high valuations in individual asset classes -- these are some of the already visible consequences of the ECB's policy, and the trend is set to continue.
Wednesday's prepared testimony by Fed Chairman Ben Bernanke to the Joint Economic Committee of Congress seemed to start out as a bravura effort designed to silence recent chatter about the Fed's so-called 'exit strategy' i.e. the 'tapering' off of its quantitative easing program.
Cuts will not produce growth. Cuts will more likely tip us into a double-dip recession, which the Republicans will blame on the Obama Administration's failure to cut more! It is surely better to stand firm and to call the Republicans' bluff.