Monday, June 11, 2012

Mr. Bernanke Has Left the Planet – And Boldly Gone Where no Federal Reserve Bank Chairman Has Gone Before

Where is That? – We Don’t Know

Will all those people who think that the U. S. economy has not slowed down in the first half of 2012 please raise their hands.  Thank you Ben Bernanke, anyone else.  Really, anyone else?  Please anyone else who thinks the U. S. economy has not slowed down in the last six months please raise your hands.  No one, huh.

Stephen Crowley/The New York Times
The Federal Reserve chairman, 
Ben S. Bernanke, appeared before a 
House committee hearing on the
 long-term budget outlook on Thursday.
Ok, will all those people who think the U. S. economy will be strong in the second half of 2012 please raise their hands.  Thank you again Mr. Bernanke, yes we see you, no need to stand up and wave.  Anyone else?  Come on people, Mr. Bernanke is a Ph. D. economist, former economic adviser to President George W. Bush and an acknowledged expert on the Great Depression.  He knows his stuff.  So someone must agree with him.  No one huh?

Chairman of the Federal Reserve Board of Governors Ben Bernanke made his regular stop before Congress to answer questions about what he and the Fed think about the economy.  Here is the gist of what he said.

But Mr. Bernanke told a Congressional committee on Thursday that the Fed had not yet concluded that growth was slowing, nor that new measures to stimulate the economy were warranted. The Fed’s policy-making committee meets in two weeks.

Yes everyone was stunned, since every piece of economic data known to man is showing that the U. S. economy is slowing and that government fiscal policy is in a contractionary mode.  Apparently Mr. Bernanke did not get the message.

“Economic growth appears poised to continue at a moderate pace over coming quarters, supported in part by accommodative monetary policy,” Mr. Bernanke told the Joint Economic Committee, an assessment that on its surface was little changed from his last public remarks on the state of the economy in late April.

About the best thing that could be said about Mr. Bernanke’s testimony is that it has left us confused.  But then we are not alone.

Beneath the surface of that forecast, however, Mr. Bernanke said that the Fed was confused. The government estimated that employers added only 69,000 jobs in May, a marked slowdown from the reported pace earlier in the year. But other economic indicators show a relatively steady, if lackluster, expansion.

The really nice thing is that Republicans, campaigning on a platform that Mr. Obama has been responsible for a bad economy and should be replaced wanted to make sure that the Fed did nothing to stimulate the economy and make Mr. Obama’s re-election chances better.

Republicans also pressed repeatedly for Mr. Bernanke to make a clear commitment that the Fed would take no further action to stimulate growth.

Representative Kevin Brady, a Texas Republican, asked Mr. Bernanke to “look the market in the eye” and “take a third round of quantitative easing off the table.”

So it is comforting that Republicans are now open about their desires to put politics ahead of the economy (and everything else), no more pussyfooting for them, they want the economy to fail and will do everything they can to make it fail.

They need not worry much, though, because the Fed is out of bullets in the monetary gun anyway, and it may be that Mr. Bernanke was stating that the Fed would do nothing more because they can do nothing more. 

1 comment:

  1. Republicans actually restrained themselves. None of them asked Bernanke to disband the Fed altogether.