Almost 3 years ago we noted [8] the oddly hubris-full confidence of Ben Bernanke of his ability to "exit" from the experimental extreme monetary policies:
"You have what degree of confidence in your ability to control this?" Bernanke: One hundred percent.
But last night we got the truth from Fed's Bill Dudley [9], who more realistically stated:
Dudley: "Exit from these unconventional set of policies is certainly feasible... But we do have to be a bit humble about what we don’t know."
So which is it? Who do you believe?
From Bill Dudley's Introductory Remarks last night [9]:
Dudley: "Exit from these unconventional set of policies is certainly feasible - the ability to pay interest on excess reserves gives us a viable tool to manage monetary policy even with an enlarged balance sheet, and the New York Fed is prepared to execute on this mission, as we always are. But we do have to be a bit humble about what we don’t know."
And from Ben Bernanke's 60 Minutes docudrama monetary policy pitch in December 2010 (that we discussed here [8])
Bernanke: "We could raise interest rates in 15 minutes if we have to. So, there really is no problem with raising rates, tightening monetary policy, slowing the economy, reducing inflation, at the appropriate time. Now, that time is not now."
Pelley: "You have what degree of confidence in your ability to control this?"
Bernanke: One hundred percent.
As we said at the time [8]:
I’m 100% sure that Ben Bernanke will be wrong again.
And sure enough - last week's un-Taper decision appears to have made it very clear that the "exit strategy" is anything but 100% assured.