Bernanke has mentioned the "wealth effect" of rising stock prices many times since rates went to zero so yes! It was all part of the big plan. Just because it wasn't mentioned at the time rates were doesn't mean it wasn't part of the plan.
Definitely the foundation for a roaring bull market when pension funds with a 30 year track record of buying fixed income are investing in hedge funds and buying stocks for the first time (for no other reason than nominal yields are inadequate for their "needs"). The irony is large caps in 2011 returned zilch with a 15% drawdown while 10-year treasuries were up 30%. Warning: don't be around stocks when these douchebag Harvard MBA fund managers have an epiphany about risk - it won't be pretty.
yes, not only was it a very good year for bonds, but it's also been a very good 10 years. I think my return when the stock market was doing it's bad thing in 2008 since 2002, when I first bought bonds has averaged out to around 6.5. but those days are over. no upside potential and too much down side risk. If I'm going to take that kind of risk it won't be in something that if nothing bad happens only pays 3%. Stocks are the place to be, maybe not whole hog all in, but the place to be looking. Almost nobody beats the market, but for the next 3 years finally the good stock pickers will have their day.
It's been a part of the plan for alot longer than Bernanke, it was just labeled as a "conspiracy" if anybody mentioned it prior to 2010. I'd argue Greenspan was de facto targeting stock prices at many junctures from 1995 onwards. The surprise rate cuts, the garbelled language, but one thing was clear..stock prices were the main impetus to drive consumption and the propensity to take on more debt, borrow and spend, etc, etc...
Great post. Funny how the intent of Bernanke and ZIRP were to drive anyone and everyone into risk assets and how "well" that is turning out. Odds are that the pensions will be "broker" and a number of insurance companies will be in dire straits after the "mandate" to move into alternative investments. Should make 2008 seem like a warm memory.
Why do I have a scary feeling that when rates do go up, Home prices will inflate instead of come down?
And contrary to what some economic cultists are thinking the Fed does not control interest rates. The markets dictate interest rates.
Are you trolling? http://en.wikipedia.org/wiki/Federal_funds_rate "The federal funds target rate is determined by a meeting of the members of the Federal Open Market Committee which normally occurs eight times a year about seven weeks apart." No, the Fed doesn't control all the rates, but as long as they keep the FFR around zero, you aren't going to see savings accounts, CDs, etc. yield much of anything. That's absolutley in their control.
You're clueless. Interest rates are low globally, across the curve because the market supply and demand drive it there. Whatever the Fed want or doesn't want is irrelevant. The Fed just reacts to what the market forces dictate. Go lookup wikipedia for "chicken or the egg".