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As the Federal Reserve ponders its policy choices at the FOMC meeting today and tomorrow, Ben Bernanke is faced with the most difficult of policy dilemmas. Does the Fed start tapering off its program of buying US$85 billion a month in U.S. Treasury bonds and in mortgage-backed securities and thereby risk slowing the fragile U.S. economic recovery presently underway? Or does the Fed continue to expand its balance sheet at an unprecedented rate and thereby risk further inflating asset price bubbles and encouraging excessive risk taking, which would all too likely build up serious problems down the road?

Economic theory would seem to offer a way out of Mr. Bernanke’s policy dilemma. As Professor Jan Tinbergen famously noted, if one has two policy targets to achieve, one necessarily must have two policy instruments in order to achieve those two targets. In the context of Mr. Bernanke’s present

We've all heard the saying that the rich get richer and the poor get poorer. Unfortunately for the average investor with a portfolio of mutual funds or individual stocks and bonds, this saying holds true.

We are now in the fifth year of an epic bull market in stocks that has seen the S&P 500 (SPY) increase over 2.5 times. Much like late 2007, we are again at all-time highs in the markets and some investors may finally be in the black again after the devastating set back they experienced in 2008. Not so fast though, the price of gold is 80% higher today and the price of gasoline is 30% higher. After factoring in inflation, today's stock prices and investment account balances are actually still in the red by a wide margin. Before you kill the messenger, let me continue. There can be a happy ending to this story.

We have liked the stock market for a while, but we haven't loved it. Our guarded emotion is directly related to the understanding that the run to new all-time highs has been artificially supported by the Federal Reserve.

That support was admittedly crucial in the throes of the financial crisis that rocked the world nearly five years ago. It helped turn the tide of negative sentiment, it helped get credit flowing again, it helped drive down interest rates, and it certainly helped boost the stock market.

Excluding dividends, the S&P 500 at its high last month was up 153% from its intraday low on March 6, 2009.

There were a few stumbling points along the way - mostly when a round of quantitative easing was nearing its end or Congress was making a fool of itself - yet there's a whole lot to like about a return of that magnitude.