In yesterday’s market-numbing speech Fed Chief Ben Bernanke blamed the first quarter’s anemic growth on the price of oil, Japan’s tsunami, etc… Clearly, in his view, exogenous forces stand in the way of an all-out recovery… Any suggestion that current monetary policy is anything but pro-growth is utter nonsense…

While granted, the pumping of liquidity into the economy virtually has to stimulate growth (or so you’d think), I can’t help but wonder; would the economy be growing right about now, given the timing, without the stimulus? Does it indeed cause, or, given the timing, simply correlate with economic growth? Or could it be that the stimulus is somehow retardant?

That last question is entirely counterintuitive… How on earth could added liquidity retard growth? The answer would have to be ‘awareness’. The awareness among the hoarders of cash that the last go-round of stimulus culminated in a bubble-bursting recession for the ages. The awareness that the people ultimately pay the bills incurred by a government of the people… The awareness that now, more than ever, prudence is imperative…

Bernanke expects the economy will improve measurably the second half of this year, and I wouldn’t disagree. I do however think that, given this newfound awareness, the rate will be on the lower end of expectations… Trust me, long-term, this is a very good thing…