I linked and quoted this very article in the original post of my thread created on February 23: LINK
Most of Kessler's article is routine, and I would go so far as to say obvious, but there was a part that was of particular interest to me (which is why I quoted it in the other thread) about why ZIRP really does hold back bank lending and economic growth. I really think people are crazy to not see that ZIRP causes immediate economic drag effects on the economy, regardless of whatever you think the immediate net
A couple of other points to make: citing Japan's lack of natural resources seems almost completely beside the point to me. There are big differences in the monetary situations the USA faces now, and those faces by Japan over the last 25 years, but availability of domestic resources is not one of them. Does it make a difference? Yes, but still, I just don't see the need to focus on it.
Finally, as to Bernanke's statement about 6.5% employment, it's laughable to think that he has the freedom to keep his word on this. If inflation rises and unemployment stays well above 6.5%, then he will have no choice but to attempt to restrain inflation. That's his job. Thus, his statement has certain assumptions embedded in its logic, and if Bernanke's assumptions turn out to be false, then he will have no choice but to go back on what he said. It's his job, you know.
Anyway, like others have said, I don't think Kessler is predicting imminent inflation or rate hikes or anything like that. He's just pointing out the plain facts about what must happen when inflation and rate hikes finally do
arrive... whenever that is. That being said, I think the historical example from 1994 is quite interesting, because it shows that it possible for rate hikes to catch Wall Street by surprise. Obviously, Bernanke does not have the same disposition now that Alan "Irrational Exuberance" Greenspan did in the mid-1990s, but that doesn't mean that Bernanke won't be forced to hike rates for reasons other than those that motivated Greenspan.
I've had one helluva busy week, and it ain't over week, so I'll probably hold any other comments until the weekend.