Wow, has it been 5 years already?
In honor of this wonderful day, let's take a look at gold charts over the last five years to get our favorite metal's opinion on Bernanke's performance, shall we?
Wow, doesn't look like it liked Bernanke's inauguration huh? It closed at $569.75 on the day he was sworn in (the first time). Ohhh little did gold know at the time...
Meanwhile, it closed at $1327 yesterday, hitting a high of $1388.50 in January. Let me pull out the calculator real quick... give me a second... hold on. Why that's nearly a 1000 bazillion percent increase in the last five years! Unaudited, of course, same as true Fed financials, not the ones that Deloitte gets to check out against the Fed's own financial accounting manual every year.
Let's revisit Bernanke's kind words at his swearing-in, shall we? On February 6, 2006, he said this:
I would like to extend a special welcome to members of Congress. The Federal Reserve was created by Congress in 1913 and entrusted with the power, granted originally to the Congress by the U.S. Constitution, to coin money and regulate the value thereof. Accordingly, it is incumbent on the Federal Reserve to report regularly to, and work closely with, the Congress. I look forward to a strong and constructive relationship with members of both the House and Senate.
That relationship has been tumultuous at best. He keeps buying their debt even though he says the Fed will not monetize (if you believe that, I also have a new monuments to sell you, prime downtown DC location) while warning them that they should maybe chill out on the debt a little. Congress made him sweat over his second term in the beginning of last year but eventually they too caved and let him come back for four more years. Is this what we might consider a strong and constructive relationship? Yeah right.
His first official speech later in February was, ironically, all about price stability. I wonder if Bernanke realized in 2006 when he delivered The Benefits of Price Stability at Princeton that Congress would be coming after his ass saying price stability should be his one and only mandate five years later. Doubtful. My guess is the poor bastard had no idea what he was in for.
Deep breath, you might need boots to wade into this one:
Price stability plays a dual role in modern central banking: It is both an end and a means of monetary policy.
As one of the Fed's mandated objectives, price stability itself is an end, or goal, of policy. Fundamentally, price stability preserves the integrity and purchasing power of the nation's money. When prices are stable, people can hold money for transactions and other purposes without having to worry that inflation will eat away at the real value of their money balances. Equally important, stable prices allow people to rely on the dollar as a measure of value when making long-term contracts, engaging in long-term planning, or borrowing or lending for long periods. As economist Martin Feldstein has frequently pointed out, price stability also permits tax laws, accounting rules, and the like to be expressed in dollar terms without being subject to distortions arising from fluctuations in the value of money. Economists like to argue that money belongs in the same class as the wheel and the inclined plane among ancient inventions of great social utility. Price stability allows that invention to work with minimal friction.
And how has that worked out for our dear Fed chairman five years later?
Inflation is allegedly low though that's only if you don't get paid in or use dollars for things like energy and food. So if you are living in a cave (what's up, Osama!) and stab your own dinner with hand-made spears, you're golden! As for the rest of us, what few dollars many of us have buy less than they used to, and that's if retailers are stocking things at all. Here in the DC metro, I've noticed a disturbing trend of stores keeping stock low because, presumably, it's easier and cheaper to piss off a customer looking for milk by not having any than it is to overbuy and end up dumping half of it.
Is this what Bernanke envisioned the night he went to sleep after his first day on the job five years ago? I doubt it. He probably also didn't imagine that his head would end up Photoshopped on gay porn with dollars coming out of his ass but hey, JDA didn't imagine five years ago she'd be doing that kind of Photoshopping.
Happy Anniversary, you money-printing maniac!