Recently in remarks from his latest speech Fed Chairman Ben Bernanke acknowledged that the Fed has done all it can do to prop up the economy and it is now up to the nation itself to rebuild the economy. You can see his speech here. My first thought when I heard this was thank God, my second was and for how long shall this last.
The reality is despite pumping billions into the economy by creating money out of thin air and increasing the nations debt nothing the Fed has done has worked. Unemployment grew, the housing market continued to falter and consumer confidence is still very low. In fact in spite of putting the country a couple trillion dollars into additional debt Chairman Bernanke is actually confused as to why it didn’t work.
He is confused! The man with the nation’s checkbook is “confused”!
You mean printing phoney money and increasing debt and getting nothing in return for it doesn’t make our economy stronger? I am personally confused by how long it took the Fed to stop messing around with the economy, at least for a little while.
Some people though are not happy about Mr. Bernanke throwing in the towel (at least for now as I predict QE3 will happen down the road). No they want Ben to continue to drop money from helicopters if necessary, anything but face reality. The following is an excerpt from a recent article on Seeking Alpha.
Those of us Democrats who were happy when Barack Obama reappointed Ben Bernanke as Fed Chair thought that we were getting the Ben Bernanke we knew — the student of the Great Depression and of Japan’s Lost Decade dedicated to doing whatever was necessary to stabilize the time path of nominal GDP, up to and including dropping bales of money out of helicopters.
Whatever happened to him?
I am sorry but WTF! I have a hard time understanding people that think this way. Something doesn’t work, harms the nation and we are just supposed to keep doing it? Please don’t take this as a political piece on my part, “those of us democrats” was a line used by the author, Brad DeLong, not me. Honestly I seriously doubt that the average Obama voter or the average McCain voter for that matter even considered Fed policy when voting much less understood it.
The sad fact is people will make this political but it is far from a left vs. right issue. Neither republicans or democrats in our nation seem to have much of an understanding about our underlying economic system. The truth is there are no helicopters of money to drop, only debt that is incurred and must someday be answered for.
I agree with Mr. Bernanke at this time, it is time to stop the propping up and bailing out, the problem is for the last three years that is exactly what the Fed did, the damage is now done and QE3 or not, it won’t matter the future is going to hold some very hard times for the US economy.