Free-market advocates, a group that emphatically includes me, think that markets are generally efficient, digesting all relevant information to reach reasonable conclusions. From the way the equity markets responded to the Federal Reserve's new round of quantitative easing -- they rose sharply -- you'd assume it's a healthy thing for the economy.
They reflect the informed view of investors that a weak economy is a bad thing, that inflation is not a serious danger, and that corporations will make more money because of the Fed's action.
But this is not how things look to the editorial writers at The Wall Street Journal. Normally they place great value in the judgment of the markets. But they oppose quantitative easing, insisting it will generate high inflation, so they can't very well say the markets must be right. Instead, they fault Ben Bernanke for "goosing stock prices," as though he can easily fool credulous Wall Street pros.
"For all the back-slapping by the Fed and the White House about how they've saved us from a Great Depression, four years later the Fed is acknowledging that the recovery is rotten," says the editorial. "But hey, it's great for Wall Street."
It's inconvenient for conservatives that the Dow is up more than 50 percent since President Obama took office. But any time they are telling us to pay no attention to what the markets are saying, you know someone in Washington is doing something right.