“A Jelly Donut is a yummy mid-afternoon energy boost. Two Jelly Donuts are an indulgent breakfast. Three Jelly Donuts may induce a tummy ache. Six Jelly Donuts — that’s an eating disorder. Twelve Jelly Donuts is fraternity pledge hazing. My point is that you can have too much of a good thing and overdoses are destructive. Chairman Bernanke is presently force-feeding us what seems like the 36th Jelly Donut of easy money and wondering why it isn’t giving us energy or making us feel better. Instead of a robust recovery, the economy continues to be sluggish. Last year, when asked why his measures weren’t working, he suggested it was “bad luck.”…If you haven’t exercised in a while, going for that first run is indeed a painful experience. So, yes, policy makers should pay attention to possible disruption, but this is not reason enough to forgo the needed change in rate policy. After jogging for a few days, exercising becomes easier, and as exercising gets easier, the desire for more exercise goes up and the desire for Jelly Donuts goes down…as an investor my job is to figure out what will happen rather than what should happen. If we didn’t have a Jelly Donut monetary policy, I would sell gold, sell bonds and buy stocks. But, the Fed is filled with academics who thoughtlessly rely on econometric models that reflexively indicate that repeated Jelly Donut orgies are the best way to get a sugar rush into the economy. And, the Fed Chairman seems to have no trouble rationalizing any policy failure on the basis that “monetary policy cannot be a panacea,” or “it’s bad luck,” or as proof that he just hasn’t force fed us enough Jelly Donuts, yet. As long as this is the case, it seems unlikely the Fed will change course. As a result, I will keep a substantial long exposure to gold — which serves as a Jelly Donut antidote for my portfolio.”
Just something to think about!
The Fed’s Jelly Donut Policy [David Einhorn/HuffPo]