Bernanke could have made his Humphrey Hawkins testimony Wednesday before Congress simple by showing them this chart:

click to enlarge

Ever had a puppy that somehow got away from the leash? You know how every time you approached it to try to reattach the leash, it thought you were playing a game of “chase” and ran away? Well, the bond market is the puppy and the Fed is the frustrated pet owner. The poor Fed has been running around its lawn, dressed in nothing more than pajamas for almost two years in a futile effort to corral an errant (but cute) bond market.

Their next meeting is scheduled for March 18, less than a month away, and frankly this is getting ridiculous. They should just bite the bullet and do something to get in front of the bond market. This clumsy chase is undignified for such a hallowed committee of out of shape economists.

Bernanke is in a tough spot: control inflation or stoke growth to prevent a recession? He’s clearly ignoring inflation right now (and the emaciated dollar) for a full onslaught against the deepening recession. The only thing Bernanke can offer to mollify those pulling their hair out at the sight of inflation is that he’s keeping a lazy eye on it.

“The FOMC will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks”

The man is after my (financial) heart. I just wish he’d moved sooner and cut deeper.

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