Bernanke, Person of the Year

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Bernanke, Person of the Year

Post  ExoticWhiteMan on Wed Dec 16, 2009 2:00 pm

Other people who were person of the year include Stalin, Hitler, Khrushchev, Nixon, and Khomeini. Not that these terrible people implicate Bernanke as a bad person, but it's ironic that his failed, pitiful policies are being praised just like those people were. You can argue that he averted a disaster, but I found the following post in a MW forum and found it convincing and logical. Personally, I think the FED's powers should be limited and government-encouraged risk should be eliminated. Businesses should make their own decisions and not have a federal agency at their beck and call to increase their profits and bail them out for taking massive risks, ripping off borrowers, and leeching money off of the economy. Anyway, here's the post:

invisible-handiman wrote:
We have had a federal reserve that for decades has a had monetary policy that is too loose. We have also had a government that legally demanded (CRA) and financially subsidized (Fannie and Freddie) bad behavior. The final insult is the myth that the world would have ended had the worst offenders been allowed to fail.

Capital seeks employment. When excess capital is rattling around the economy (interest rates from the fed are artificially low), increasingly risky investments will be made. This is because the low hanging fruit of low risk/high return investments have already been pursued. The more loose the monetary policy the riskier the investments. This is by definition a "bubble" and it is the direct and result of an incompetent Federal Reserve.

Now, add a regulatory environment that for decades has said to the banks:
"Make bad loans" (again, Community Reinvestment Act). Fannie and Freddie will buy the mortgages and repackage them. In addition, if there is ever a problem the gov't will cover Fannie and Freddie so risk isn't an issue. Let the profits roll!"

Believe it or not there are many banks that behaved responsibly and would have benefited greatly long term had there been a shake out in the banking industry. I am amazed that we have politicians who stole from the American public to save failing banks and then we fault bank leadership at failing institutions for grabbing the lifelines. I blame the boneheads writing checks out of my account much more than the boneheads willing to cash the checks.

Yes, bankers are self-interested. However, the real crooks are those that are now posturing as saviors of the western world while they continue to plunder the future of America. If we are looking for crooks I propose the following:

Public Enemy #1 - The Federal Reserve - Why exactly do we need unelected bureaucrats manipulating interest rates (controlling the value of money)? I wonder what the real market rates for borrowing money would be without manipulation.
#2 - The federal government for continuing its ridiculous interventionist policies, because for some reason the belief persists that politicians know more about running businesses than do successful business people.

A very distant third are the subset of bankers that over-reacted to the ridiculous environment created by the Fed and the gov't. Had TARP not happened, this group wouldn't even make the list as the market would have resolved very nicely all the issues of executive compensation, poor lending practices, etc.
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Re: Bernanke, Person of the Year

Post  Gustavus_Adolfus on Thu Jan 21, 2010 5:06 pm

i disagree. without the federal reserve America would have been DESTROYED.

What would America be like without the Fed? Look at the Great Depression. That occurred because there was nothing done from the central bank at the time.

Was there too little regulation of shoddy loans? Yes there were. However it takes years for this to come into affect, Bernanke was thrown into a bumblefuck.

Was it his mess? Yes and no, he was a part of the Fed and has become complacent with the previous mortgage situations. However the key point is once he had the power to dictate the monetary policy he has done a good job. It is simple economics, he did as he should have especially after we learned our lesson after the Great Depression.

If capitalism is to remain our form of policy then we must keep the fed and have leaders like Bernanke who know to step back and let things play out UNLESS there is dire need for intervention.
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Re: Bernanke, Person of the Year

Post  Church1ll on Fri Jan 29, 2010 1:02 am

Yea I really don't like HOW our country avoided a second Great Depression, but the fact is that it was avoided.
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