The Fed Says Potato, the Market Says Potahto – Let’s call the Whole Thing Off!

The Wall Street Journal reported, today, that investors are selling off U.S. government debt, challenging the Federal Reserve’s efforts to push interest rates lower, and, instead, driving rates, in many cases, to their highest levels in more than three months (See previous blog post:  Inflation Nation). 

The rise in borrowing costs is a most unwelcome side-effect of the Fed’s QEII program (See previous blog post:  QEII – No Luxury Liner for the Average Citizen).  The Fed’s credibility stands to be damaged and borrowing costs may grow broadly.

Since QEII is a giant gamble, it may be well to take note of the advice of the late, great Louis Armstrong: “Potato, Potahto, Tomato, Tomahto, Let’s call the whole thing off.”