Over the weekend Federal Reserve Chairman, Ben Bernanke, wrote an Op-Ed piece for the Washington Post called; “The right reform for the Fed.”
In this article I break down what Bernanke is saying and relate his cry for the Federal Reserve to remain independent (no audit) to the reality of what the Fed has actually done to cause the crisis to begin with as well as what their existence means to the odds of any economic recovery occurring in the future.
Why Is Bernanke Reaching Out to the Public?
First one must understand why Ben Bernanke is turning to the public via the Washington Post to make his plea.
The reason Bernanke is running scared are the bills before the House and Senate; H.R. 1207 and S 604. These bills, according to Bernanke, would “significantly reduce the capacity of the Federal Reserve to perform its core functions.”
So before analyzing Bernanke’s current statements, one must look at what these “core functions” are that Ben is speaking of. To do so, lets turn to the Fed’s own pamphlet entitled; “The Federal Reserve System; Purpose & Function.”
I have posted below the screen shot from this pamphlet outlining the “duties” of the Federal Reserve:
How has the Fed done so far in adhering to their duties? How are credit conditions? Are banks lending? Is there “stable unemployment?” How did the Fed do with the “stability of the financial system?” How did they do with “containing systemic risk?” How about “supervising and regulating the banking institutions to ensure their soundness and safety?”
And Bernanke thinks that we can now, via the Fed,
“design a system of financial oversight that will embody the lessons of the past two years and provide a robust framework for preventing future crises and the economic damage they cause.”
Really Ben? Why should we believe you….this time?
What Ben is really saying is that he wants to keep the entity intact that caused the problem to begin with, not by any new “design,” but a grab for more power. He wants to keep the truth from We the People that the Fed is really the reason why our Economy had a meltdown to begin with.
Today, what we have is nobody lending, no businesses producing, high unemployment, over 100 failed banks, and hence no recovery.
Why aren’t the banks lending? Because the banks took the stimulus they received to shore up their own balance sheets!
Bernanke’s Green Shoot Delusions
Bernanke has claimed
“The Fed played a major part in arresting the crisis, and we should be seeking to preserve, not degrade, the institution’s ability to foster financial stability and to promote economic recovery without inflation.”
Did the Fed play “a major part in arresting the crisis” or has the Fed action actually prolonged the recession through government spending, aka “green shoots” which will actually make things worse? Adding debt to debt doesn’t qualify Bernanke to declare victory by saying “the recession is very likely over.”
Bernank’s Concluding Remarks
Bernanke concluded his Washington Post editorial by saying;
“Now more than ever, America needs a strong, nonpolitical and independent central bank with the tools to promote financial stability and to help steer our economy to recovery without inflation.”
Is the Fed strong? No.
Is the Fed nonpolitical? No.
Is the Fed independent? No.
Does the Fed have the tools to promote financial stability? No.
Does the Fed have the tools to steer our economy to Recovery? No.
Does the Fed have the ability to stem inflation? No.
What worked for the Fed with Volcker in the early 1980’s will eventually be tried here. The Fed will at some point raise interest rates as the dollar breaks below its March 2008 lows of just under 72. Until that time, enjoy the deflation and green shoots, and maybe even a dollar rebound for a bit, but don’t expect the Fed to solve any of our economic problems that they got us into to begin with.
The One Thing Bernanke Is Really Afraid Of
So what is the one thing Bernanke is really afraid of? It’s not the “Audit the Fed” bill as much as what auditing the Fed would reveal and eventually threaten.
What it will reveal is the shenanigans that Ben and his cronies have been up to in giving taxpayer money to the likes of Goldman Sachs, J.P. Morgan, AIG, as well as foreign governments and entities. What Bernanke is really afraid of is what comes next, the People’s demand to “End the Fed!” This will threaten his own livelihood, so of course he is out trying to save his job while destroying everyone else’s.
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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