Outgoing Federal Reserve Chairman Ben Bernanke has been a controversial figure over the course of his two terms at the helm of the nation's central bank. While President Barack Obama and House Democrats have lauded the Fed Chief for his plans and initiatives to improve the economy, increase employment opportunities and rally against inflation, critics have been staunchly opposed to his unprecedented policies toward quantitative easing (QE) that many argue have put the recovery on a dangerously unsustainable track.
Essentially, the QE initiative eases stress on lenders by purchasing millions of dollars of distressed bonds in an attempt to relax strict lending practices that many institutions put in place to prevent the borrowing catastrophe that ultimately resulted in the housing and stock market crashes in 2007 and 2008. In essence, this activity has placed true capitalism on hold in favor of an economy that is dictated by the whims of the current administration and funded by the taxpayers, who are already seeing their personal wealth evaporate as a result of irresponsible regulation.
For much of the past year, Bernanke has been promising to pull back the Fed's QE program as soon as signs of economic stability begin to emerge. A telling indicator of the flaws in the system has emerged, however, as the central bank continually gets greeted with only middling economic data ahead of each policy-setting meeting of the Federal Open Market Committee (FOMC). Instead of abandoning this arguably unsuccessful initiative in favor of modified legislation, the QE program has instead continued full force for much of the past year.
It's behavior like this that has had many prognosticators wary about the appointment of Bernanke's right-hand woman, Janet Yellen, as his successor when his second and final term comes to a close on January 31. However, before any changing of the guard takes place, a deadline has been set for the afternoon of Wednesday, January 29, for any major policy changes to be announced as Bernanke's final FOMC meeting comes to a close.
All of this means that instead of riding out the storm until he can pass the reins over to Yellen, Bernanke will have to hunker down until the 11th hour to create a consensus vote behind whether he will allow Yellen to inherit the QE initiative as is or if, despite continued lackluster economic data, the program will fold.
This will be an especially tense meeting for Bernanke, since the latest jobs data was far below even the most pessimistic analysts' expectations. After reporting more than 200,000 jobs added to the economy in October and November, respectively, December clocked in with a dismal 74,000 new positions, despite an earlier forecast of roughly 196,000 for the time frame.
These disappointing numbers have had the stock markets reversing course over the past few weeks as well. After rallying to record highs month over month for much of the tail end of 2013, global markets have been falling steadily for the first time in years as upheaval in many emerging markets and the potential loss of billions of dollars printed by the central bank have had many investors wary.
While the decision is sure to be a tough one for Bernanke and the FOMC, many investors are strangely optimistic about the current state of the economy and what that means for QE.
"While recent stock market declines may give the committee some pause for thought, they are likely to continue to reduce these purchases, probably to a pace of $65 billion per month, as a combination of a fast-falling unemployment rate and moderate economic growth make today's extremely accommodative stance seem ever more inappropriate," David Kelly, chief global strategist for JPMorgan Funds, told FOXBusiness.
However, anyone who wants to secure a comfortable and affordable retirement shouldn't rely on the prognostications of sources like Kelly to determine whether or not their investments are safe. Make wealth preservation a priority so that your retirement investments are secure no matter what actions the Fed takes.