Excerpts from: Money on Autopilot The Fed keeps its eye on employment, not on the dollar.From the Editors of the Wall Street Journal
Yesterday's Federal Open Market Committee statement after its two-day meeting declared that the economy has improved but that this is still no reason to stop driving its monetary engine like an Indy race car.
The Fed has been running full throttle for an entire year, while the financial panic has subsided, credit markets are healing, and third quarter GDP growth was 3.5%. . .
English translation: The Fed is going to maintain zero interest rates for as long as the political eye can see. . .
The Fed's irrationally exuberant ease is clearly showing up around the world in a very weak dollar, asset bubbles in the likes of Asian property, and rising commodity prices that include $80 oil despite weak global energy demand. This risks creating new monetary excesses that will eventually have to be corrected in ways that could jeopardize the global and U.S. recovery.