Ben Bernanke Thinks QE Has Helped The Middle Class

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Don’t laugh, but Ben Bernanke refutes the fact that easy monetary policy from the Fed has favored Wall Street… he even goes as far as saying it has helped the middle class! Quote : « Even though this may come as a shock, I don’t agree. Our monetary policy has helped american households to improve their financial situation. The Fed has contributed in a significant manner to the well-being of the middle class and of the poorest Americans. » This is what he said on November 19, according to AFP.

This is no more only willful blindness… it’s pure bad faith. When he evoked a possible tapering of quantitative easing, last June, the stock market plunged. His decision, in September, to keep the printing presses running full speed, contrary to what the markets were afraid of, led to the indices marching higher. Without these $85 Billion being created out of thin air each month, the stock market would collapse; it’s grown addicted to this drug. What else could be pushing stocks higher? Businesses profits or growth perspectives? Come on…

As for the American population… they’re better off, really? The « official » unemployment rate is 7.3% in October, but everyone knows that this number doesn’t take into account the long-term unemployed. Poverty? It’s getting worse, with close to 50 million Americans on food stamps, compared to 29 million in August, 2008… this is the sad state of affairs.

What should keep us worrying is the perversion of Ben Bernanke’s reasoning, that he sadly shares with his successor : « I agree with the opinion expressed by my colleague, Janet Yellen, that the surest road to a more normal approach of the monetary policy is in doing all that is in our power to promote a strong recovery. » Now, there is a fundamental confusion in this kind of reasoning, and an inversion. The confusion consists in affirming that the Fed must promote economic recovery; this is not the function of a central bank! It’s rather the function of the economic agents to promote a recovery or not, depending on productivity, savings and investments. Then the government can help by easing market conditions (for example, Obamacare is weighing heavily on labor costs…). What can a central bank do? It can lower the base rate… and thus discourage savings, the foremost engine of an economy. The inversion consists in waiting for the recovery to raise the rates, while it should be the opposite… raising the rates would stimulate savings.

And this vicious reasoning is set to continue : Ben Bernanke and The Federal Open Market Committee (FOMC) will continue its highly accommodative policy for as long as it will take. » ‘As it will take’? Until the recovery? It won’t come any time soon! But all bubbles, after a while, end up bursting…


Philippe Herlin


Philippe Herlin – Researcher in finance and junior lecturer at the Conservatoire National des Arts et Métiers in Paris / Contributor on / @Philippeherlin / Facebook

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