A Few Questions for Ben Bernanke
Aug 25th, 2009 by David Anderson
Chairman of the Federal Reserve Ben Bernanke has been nominated for a second term. He has a 99% chance of confirmation allowing for a heart attack or complete collapse of the economy. That does not mean he should not be asked to justify a few policies.
The Federal Reserve is paying interest on excess reserves which discourages lending. Then it acts in extraordinary ways to try to pump money into the system such as by purchasing commercial credit. If it went back to not paying interest on excess reserves, the market would correct itself. Why are taxpayers borrowing money at interest to loan to the banks which then do not have to put that money into circulation because they can have a risk free investment where they get paid interest to keep excess reserves (beyond what is required to insure solvency) in the proverbial vault?
It would be nice for him to justify all of the new regulatory powers he requests step by step. The Fed is already the most powerful economic institution in America. Giving it unchecked power directly over the non-banking part of our economy gives a private stock holding corporation direct regulatory enforcement powers.
Who is more likely to be right the CBO or the OMB when it comes to unemployment numbers? The CBO is projecting an average of 9.8% unemployment for next year.
Finally what level of disclosure should the Fed give to the public. There is a move to audit the Federal Reserve. The Chairman opposes it. Fine, what is his counter proposal. We are being asked to give unprecedented powers to a privately held corporation that we don’t even know who all the stockholders are let alone have ever seen its books. Can we at least see the tax money that goes in and leave the rest private?
The good news for the Chairman is that I am not on any Senate committees. It is not that he can not easily answer these questions. It is that he does not desire to answer them. I hope at least one person gives him the opportunity.
I just want to know if he’s planning on revising his economics textbook. You know, to admit that he can’t even balance a checkbook?
It is pretty hard to balance the checkbook when the previous administration, after eight years, nearly doubled the debt, and wrote checks for huge expenditures that were not in the budget. But excuse me, G Rex, with his blind partisanship, has already buried those facts.
And David, although you have raised a few important questions, I can’t help but notice that you don’t give Bernanke any credit whatsoever for saving this nation from a great depression catastrophe, at least so far, brought on by the negligences of the previous administration, your side that is.
We are not out of this yet, with unemployment and foreclosures still rising alarmingly, and a mounting debt that makes one wonder how patient our creditors will continue to be. The sins of the Bush and Clinton administrations, together with the gluttony of the American people and the greed of the wealthy elite, have put this nation into a precarious position that will take years of belt tightening, frugality, and income redistribution to fix.
I hope we are up to doing what has to be done! I am seeing some good signs on the belt tightening and frugality front.
“Staving off a depression increases your chances of another term as Fed chief.”
h/t Robert J. Samuelson via dailyKos
I do agree with you that he should receive a great deal of credit for keeping us out of Depression. For that he was the right man at the right time. I do not oppose his reappointment. I just see it as such a lock that I did not comment on that part of it. Thank you for your interest, it is a very fair observation.
The Federal Reserve is unconstitutional, as is non-gold-or- sliver-backed currency. Read the Constitution- “gold or silver coin“…