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Will Yellen Pull a Bernanke?

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As you may recall, just a little over two years ago there was a great deal of fuss which seems likely to go down in history as the "Taper Tantrum."

Fed chief Ben Bernanke committed to the idea that the Federal Reserve would taper off its bond buying (that is, its new money creation)in the fall of 2013. In the late spring of that year, some market traders, especially in the bond markets, began to get the idea that "he might really go through with it" and they weren't ready.

The Federal Reserve was itself spooked by the volatility in the bonds markets, and it backed off: Bernanke started in with "I didn't really mean it" statements. And left office the following year.

Now we have a new Fed chief, Janet Yellen, and she too has proposed what she is calling a "normalization" of Fed policy.

This time, too, as the date approaches, some markets get volatile. This time the tantrum is in equities rather than bonds. Why? Mumble mumble pseudo-explanation, mumble mumble Trump, mumble mumble China.

Anyway, we have arrived at put-up-or-shut-up time for Yellen. This coming week, Yellen is either going to normalize, or she is going to back off and continue easy money gamesmanship for ... however long ... perhaps until her successor takes over. 

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