Tag: Ben Bernanke

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free trade & free markets national politics & policies too much government

The Woman Who

The good news? Federal Reserve Chair Ben Bernanke is getting the boot. The bad news? His replacement looks no better.

Last Thursday, the Senate Banking committee voted to place Janet Yellen as head of the Federal Reserve. The full body of august solons is expected to confirm this nomination, electing her as head honcho and chief cook (kook?) at the nation’s quasi-​private/​quasi-​public central bank.

I am sure there are folks who look on this passing of the baton with a sort of patriotic piety. I know there are Democrats who rejoice in a banker referred to by Reuters as “a monetary policy dove who puts more weight on driving down high unemployment than the risk this will ignite future inflation.…”

Of course, the Fed has already pumped trillions into the system. A burgeoning employment boom has not resulted. To say the least.

Reviewing the current situation, and the likely appointment, economist Gerarld P. O’Driscoll, Jr., reminds us of the big truth about those who push at the Veil of Money: “the Fed is not capable of stimulating job creation, at least not in a sustained way over time.” What the Fed has succeeded in doing, in recent years, is prop up our benighted federal government’s continuing crisis of over-​spending: “Congress and the president have been spared a fiscal crisis, and thus repeatedly punted on fiscal reform.”

Problem is, no one really believes debt accumulation or monetary back-​up make for a sustainable policy: at some point, O’Driscoll tells us, rising interest rates will “precipitate a crisis.”

I wouldn’t want to be in charge at the Fed when that happens.

So, some sympathy for Ms. Yellen.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets national politics & policies

The Bernanke Stretch

Last week, the Federal Reserve announced it was going ahead with “quantitative easing.” Chairman Ben Bernanke said that he’d be buying $40 billion dollars of mortgage-​backed securities every month, no end in sight.

Now, the traditional way that the Federal Reserve influenced the money supply, economist Randall Holcombe explains, was via “open market operations by buying and selling government securities.” But this changed in 2008 with the $85 billion AIG bailout: “Since then it has engaged in continual bailouts of financial firms and purchases of non-​government securities.…

The Fed has moved from engaging in monetary policy in a way that was neutral toward various businesses and industries in the economy to one in which monetary policy is targeted toward specific firms and industries. This current foray, specifically targeted at the housing market, is crony capitalism.

It’s actually worse. It’s crank policy, as the redoubtable Mr. Peter Schiff summarizes: “Ben Bernanke’s plan to revive the U.S. economy and create jobs is to inflate another housing bubble. That’s it. That’s what the Fed’s got. That’s what it came up with. As if the last housing bubble worked out so well for the economy that the Fed wants an encore.”

Our leaders are obviously desperate.

And out of control. George Will states that the Fed has gone far beyond “mission creep” — it’s “mission gallop on part of the Fed, which is on its way to becoming the fourth branch of government — accountable to no one and restrained by nothing, as far as I can tell, in exercising both monetary and fiscal policy.”

This is what forsaking limited government and the Constitution gets you: a sort of frantic idiocy in aid of politically connected speculators and financiers.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

X Marks the Mistake

Take subject X. What if nearly everything we’re told about X — by the most famous experts and by people in government, as well as most folks in the media — is wrong?

Let X be diet. Maybe the whole “anti-​fat” idea, dominant for most of my adult life, is wrong. There’s evidence for it.

Let X be AGW, the theory of anthropogenic (human-​caused) global warming. We’re told that there’s a consensus in favor of it. But there’s less to that alleged consensus than meets the eye — or scientific rigor.

But to really blow your mind, consider central banking.

We’re told that the job of the central bank is to protect us from the fluctuations of boom and bust. The Federal Reserve was established by the federal government just to help us! But … what if that was never the actual reason that banks have been centralized?

Economist George Selgin posted, last week, a thorough debunking of Federal Reserve Chairman Ben Bernanke’s recent statements about what he’s up to. If you have never heard of free banking before, or the long tradition of central banking criticism among monetary economists, Selgin’s critique may seem outrageous … as outrageous as Copernicus and Galileo were back when most folks thought the Earth was the center of the universe.

If Selgin is right (and I think he is), nearly everything we’ve been told by experts and politicians about money, boom and bust, and banking, is wrong.

The central banking school is X.  X is wrong.

So if the Fed doesn’t do what it’s “supposed to,” why do we have it?

It serves big government and some big bankers.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets ideological culture insider corruption

Billions and Billionaires

Where do billionaires come from?

Douglas French, president of the Ludwig von Mises Institute, reminds us where the term “millionaire” came from. It was

coined in 1720 during John Law’s “Mississippi Bubble” to describe those making vast fortunes in Law’s Mississippi Company stock that rose from 150 livres to 10,000 in the matter of months. But just as quickly, the stock and the currency wildly inflated by Law’s Banque Royale, crashed and Law was forced into exile.

Today’s plethora of billionaires — which in 15 years has increased fivefold — is (argues French) at least in part the result of Ben Bernanke’s monetary manipulations. He’s the John Law of our time. “What were once Law’s millionaires are now Bernanke’s billionaires.… Bernanke has been on the job for six years, and the Gates, Buffetts, and Slims of the world are reaping the benefit. But for how long?”

Keeping track of today’s billionaires has become both a form of popular entertainment (Forbes’s list) as well as a topic for careful study. The political “philanthropy” of George Soros and Charles Koch inspires both enthusiasm and dread in activists, left and right; Warren Buffett has become something of a hero to the 99 percenters, what with his repeated pitches for higher taxes on the rich.

But Buffett is a sly one. He makes his money in a variety of ways — one of which Peter Schiff recently explained: “Buffett actually stated in September 2008 that he would not have invested in Goldman Sachs if not for the implicit guarantee of federal assistance. As a result, he profited at the expense of taxpayers at the very time when they were losing their savings in the markets.”

Not all billionaires are created equal.

This is Common Sense. I’m Paul Jacob.

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national politics & policies porkbarrel politics

Good and Bad in the 112th

The 112th Congress is beginning to take shape, and, well, we have good news and bad news.

Good news first: Ron Paul has been slated to chair the Domestic Monetary Policy Subcommittee.

The Texas congressman has been toiling away at the margins of power on Capitol Hill for years. A proponent of a gold standard and a free-​marketer of the “Austrian” School, he has been a voice crying in the wilderness. One of the few people in Congress who did not treat Alan Greenspan as a divine oracle, he is now one of Ben Bernanke’s harshest critics. 

Of course, after recent events and bailouts and all, Federal Reserve Chairman Bernanke has lots of critics.

As chair of the subcommittee that watches over the Fed, Ron Paul has finally attained a position to accomplish something. This is a major reversal in the power structure. We can’t expect miracles (Ron Paul being but one man), but do expect fireworks.

Now, the bad news. 

It’s been less than a month since Republicans in the House voted on a moratorium on earmarks. And already they are, reportedly, beginning to feel queasy. Perhaps as a sign of a general turncoatish nature, the next chair of the House Appropriations Committee is set to be Rep. Hal Rogers.

Sixteen-​term congressman Rogers has earned a reputation for pushing pork. His hometown has received so much federal largesse it’s called “Mr. Rogers’ Neighborhood.”

Still, he says he’ll enforce the pork moratorium. We’ll see.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Bernanke’s Pseudo-​Semi-​Solution

I’m not convinced. I’m not persuaded by Federal Reserve Chairman Ben Bernanke’s recent comments about how we must start trimming the nose hairs of the federal government’s runaway deficit spending.

Bernanke has been a great enabler of economic disaster. By pumping so much easy credit into the economy after the Great Internet Bubble popped early in the decade, Bernanke and his predecessor made it easy as pie to pile up all the bad housing loans that produced the Great Housing Bubble late in the decade.

His new solution? Massive new multi-​billion bailouts of bad economic actors. More and faster pumping of the money supply. More and faster enabling of bad investments and bad debt by working to keep federal-​fund interest rates vanishingly low.

Now Bernanke wants America to reduce its sky-​high deficits — $1.42 trillion for fiscal year 2009. He says we need a “clear commitment to reduce federal deficits over time.” Sure Ben, sure. I don’t disagree. But talk is cheap. Especially vague, general talk that your own actions persistently belie.

Bernanke seems to have some inkling that the fantasy economy can’t persist forever. He has, alas, no real idea of how to return to reality. He’s the guy who blows up a dam and then wants to lay down some twigs to stop the flood.

Stop blowing up the economy, Ben.

This is Common Sense. I’m Paul Jacob.