Posted on 19 Oct 2010 at 1:30pm By GavinoWell, that’s a relief! We all thought that turning around the U.S. economy would be difficult but Federal Reserve Chief Ben Bernanke says he can fix it by just manipulating some monetary levers.
Can Ben fix it...?
Not that “Ben the Builder” has had much success with his adventures so far. In the waning years of the Bush presidency, he kept interest rates at near zero in a failed attempt to recapitalize over-exposed banks without publicly revealing their vulnerability. The idea was to maintain confidence on Wall Street through sleight of hand instead of fixing Fannie Mae and Freddie Mac. A lengthy recession, weak dollar, high oil prices and zero returns for savers were all collateral damage.
Bernanke then stood by while Comrade Obama and the Democrat Congress enacted its near trillion dollar spending binge, which transferred investment dollars from the private sector to government welfare programs. Instead of raising interest rates to stave off inflation and protect the dollar, he risked everything by keeping them low and relied on platitudes to calm investor nerves. The economy tanked and unemployment rose to 10 per cent.
With the U.S. economy stagnant, Bernanke now feels he can spark growth by deliberately creating the inflation he has so far been fortunate to avoid. In the short-term, house price inflation may help some home owners to escape negative equity more quickly than would otherwise be the case. But unless Bernanke can finesse the impact of his “monetary easing” – massive bond purchases – wages will fall in real terms and Grandma will see the value of her nest egg diminish. No wonder the price of gold continues to rise.
Bernanke has proved to be as self-delusional as the climate change hoaxers. He believes that whatever Congress does to wreck the U.S. economy – housing policies that cause a financial catastrophe, bailouts that undermine the concept of risk taking, regulations that kill investment, spending that stagnates economic activity – he can fix.
Ben’s fixes not only won’t work, they are making things worse. What the U.S. economy really needs is lower government spending and a political environment that encourages investment. That will only come with political change.
The main problem is that too many people think that no or low economic growth is a good thing. You know, the ones who forget that we produce in order to consume, because they hate consumers, affluence and fun. Ambition, greed, profit, risk and success get a bad rap today. They’re in need of rehabilitation. America’s not beaten yet, but it’s in danger of defeating itself by decaying from within. Meanwhile, in China there are no such inhibitions and no such legacies of self-hate and self-doubt – they’re just going for it.
I agree with Paul.. and to that point, I’d add that we are all along for the ride in a big political machine that’s out of control. I’m sure I’m not alone in thinking there is nothing I can do about it but watch it derail, crash, and burn before anything changes for real.
Our economy is a very simple problem complicated by layers and layers of manipulation. The puppets are putting on puppet shows.
BTW, thanks for using the word ‘platitude’.. not often seen but much enjoyed.