Ben Bernanke is like almost anyone else. He ignores contrary data, and accepts confirming data. He knows what his overlords want, and unlike his better predecessors Volcker & Martin, he gives them what they want, because he is their “good boy.” Say “Arf,” Ben.
A good central bank fights the politics of the nation of which it is a part and tries to preserve purchasing power, ignoring labor unemployment. It tries to be a paper “gold standard.” That has not been the Fed for 25+ years.
But Bernanke has been inconsistent in his reasoning regarding monetary and fiscal policy. Consider this:
“You can only conclude that highly accommodative monetary policy for the foreseeable future is what’s needed in the U.S. economy,” he said Wednesday at a conference held by the National Bureau of Economic Research, citing the high unemployment rate, low inflation and “quite restrictive” fiscal policy. He said he expects the Fed won’t raise short-term rates for some time after the unemployment rate hits 6.5%, which would be more than a full percentage point lower than its current level.
But fiscal policy is highly accommodative, just not as accommodative as it was one-to-two years ago. Why is Bernanke raining on the parade of fiscal policy? Because he wants to defend his foolish monetary policy.
As it is, when he described future Fed policy at his last press conference, he indicated that policy accommodation would be reduced within two years, when the expectation was that it would last longer than that. After the market jolt (the Fed does not understand markets), he and many other Fed Governors tried to re-explain what Ben Bernanke had said so clearly.
The apologists for the said that accommodation was continuing, just not as much as before. The Fed was still accommodative. But what of the shrinking US Budget deficit, which is “quite restrictive?”
Ben Bernanke speaks with a forked tongue. He does not mean what he says, he only speaks to justify the Fed and its failed policies. He can’t see that he is as guilty as what he condemns. That means he is really evil, or really stupid. I choose stupid. What do you think, Ben?
By David Merkel, CFA of alephblog