Liquidity Hogs

clipped from articles.moneycentral.msn.com Turning to last week's main event, the Federal Reserve's Open Market Committee meeting, here's what I wrote ahead of the release: "There is just too much pressure on the Fed (not the least of which is Bernanke's view of the 1930s) for it to do anything that even remotely resembles tightening." The Fed did not contradict me, as it chose to continue pursuing the policies it had previously articulated. That must have put a smile on the face of Paul McCulley of Pimco, who recently stated in an interview on Bubblevision that he wanted the Fed to avoid raising interest rates too soon and that the economy needed to see more inflation. That, ladies and gentlemen, coming from the country's largest holder of bonds. In the old days, bondholders were thought to be inflation vigilantes. But as we can see from McCulley's statements, they are now really just liquidity hogs.