Bernanke outlines plan for pulling in stimulus aid

In prepared remarks to a House committee, Bernanke says the Fed will likely start tightening credit by boosting the interest rate it pays banks on money they leave at the central bank. Consumers and companies would then have to pay more to borrow.

• The market, not the Fed, sets short-term rates. The Fed has the choice to either listen or ignore them. If the Fed chooses to ignore, short-term spreads will widen (cause and effect). Widening spreads will intensify dislocation created by money flows adapting/playing those spreads, thus, causing unintended consequences. That is a dangerous choice to make in an already fragile credit environment.
• If the stimulus brakes are applied as suggested, the sum drained would be meaningless in terms QE, both official and unofficial, already injected.
• Let's not forget, that there's a big difference between talk of and actual withdrawal.

Source: finance.yahoo.com