The Fed is Not Your Punching Bag and It's Not Bernanke's Fault (No Really)
Don't end the sinister Fed! It's a Pandora's box of unawesomeness, or so says Robert J. Samuelson in the Washington Post:
Ever since its creation in 1913, the Federal Reserve has grappled with a daunting political contradiction. The Fed is charged with preventing the collapse of the banking and financial system, whose health is essential for the "real economy" of production and jobs. But financial bailouts usually occur when mistakes or misdeeds by bankers and investment professionals make them public pariahs. To do its job, then, the Fed protects -- or seems to protect -- an unpopular, disgraced and undeserving group. We are now witnessing this contradiction in full bloom.
The Fed has become a congressional scapegoat for assorted economic frustrations: 10.2 percent unemployment; expensive rescues of fragile financial institutions (AIG, Bear Stearns, Citigroup); outsize Wall Street bonuses; and the crisis itself. The denunciations transcend rhetorical outbursts. The House Financial Services Committee recently voted to require the Government Accountability Office (GAO) to "audit" the Fed's monetary policy -- its efforts to influence interest rates and credit conditions. In the Senate, Christopher Dodd, chairman of the Banking Committee, has proposed stripping the Fed of all powers to regulate financial institutions -- its actions to police lending and management practices. These powers would go to a new agency.
The Fed backlash is bipartisan. Rep. Ron Paul, a Republican and libertarian, proposed the GAO audit, which he sees as a first step toward abolishing the Fed ("End the Fed" is his latest book). Paul favors resurrecting the gold standard and combining it with private money; Wal-Mart could issue currency. His views are long-standing, principled -- and wholly impractical. Dodd, of course, is a Democrat. Much Fed-bashing simply indulges Congress's impulse to blame someone else for anything unpleasant.
Anyone remember Our Lady Peace? I lived off of the stuff in the 90s (sorry, I also had slap bracelets and went to a NKOTB concert - does that date me? Suck it, my side ponytail was rad and you know it) and lead singer Raine Maida later wrote a track called Careful What You Wish For that might be appropriate now.
Whatever, sometimes you need a musical interlude to chew on this stuff.
I reluctantly have to admit he's sort of right. Not that I'd let Bernanke's recent "please keep me" pitch cloud my judgment but if we dismantle or even significantly wound the Fed, the true nature of the United States' fiscal trouble will become painfully apparent to the rest of the world. From a tactical standpoint this would leave us exposed, a giant gaping wound where our central bank used to be. Are we at all prepared for that?
As is, we're the cancer patient trying to pretend like everything is going to be okay. It's obvious that we're not doing well, so which option is worse?
Eventually we're going to have to cut the tumor out. The question here is: are we ready for what comes after?
Ben Bernanke is taking all of the heat at the moment and not to (literally) position myself as Devil's advocate here but is it fair that he's the one in the frying pan? I sincerely doubt this guy knew what he was getting into in 2006, regardless of how long he'd been bumbling around on the inside as a Governor. So what? He was in denial as the housing market was collapsing before his face, you can't tell me Ben Bernanke came equipped with "Diabolical" as a setting. Someone broke the glass on that motherfucker and he's since turned that way but it was Tim Geithner engineering backdoor bailouts, not Zimbabwe Ben. That guy is a hack, it might be a bit misguided to direct all of our anger at him.
Senator Bernie Sanders said on Sunday he will not vote to reconfirm Ben Bernanke as chairman of the Federal Reserve, in a preview of the rough treatment Bernanke may get this week on Capitol Hill.
The central bank chief will testify on Thursday before the Senate Banking Committee at a hearing on his nomination to a second four-year term. The session could be difficult, with the Fed under fire from across the political spectrum.
The open opposition of Sanders, an independent outside the political mainstream, is unlikely alone to derail Bernanke's renomination. But it reflects the Fed's challenges.
"I absolutely will not vote for Mr. Bernanke. He is part of the problem," Sanders said on ABC's "This Week" TV program.
I remind dear reader just how clueless Ben Bernanke was leading up to all of this:
"the fundamentals are strong" LOL!!
Anyway. Either way you look at it, it is a lose-lose. I highly suggest we figure out what we are going to do when we do bust down the joint and take back our country because we're going to have one hell of a mess to clean up and we'll need better auditors than KPMG (bwhahaha Dubai WTF!).
Is there a historical precedent for what we are attempting to do?
Totally. And it happened right here in the United States twice before. So someone hand me a crowbar and let's break into Pandora's fucking box and see just how bumbling Zimbabwe Ben is after all.
Thanks for the warning though, WaPo, we'll keep that in mind.