I am curious at the desire of all of the talking heads, left and right, to hand as much power to the federal reserve as humanly possible. Here are two of the few detractors.
In response to the claim that deregulation of the current administration is to blame, a canard to which the NY Times and most liberals religiously cling, Sebastian Mallaby of the Washington Post says this:
The real roots of the crisis lie in a flawed response to China. Starting in the 1990s, the flood of cheap products from China kept global inflation low, allowing central banks to operate relatively loose monetary policies. But the flip side of China’s export surplus was that China had a capital surplus, too. Chinese savings sloshed into asset markets ’round the world, driving up the price of everything from Florida condos to Latin American stocks.
That gave central bankers a choice: Should they carry on targeting regular consumer inflation, which Chinese exports had pushed down, or should they restrain asset inflation, which Chinese savings had pushed upward? Alan Greenspan’s Fed chose to stand aside as asset prices rose; it preferred to deal with bubbles after they popped by cutting interest rates rather than by preventing those bubbles from inflating. After the dot-com bubble, this clean-up-later policy worked fine. With the real estate bubble, it has proved disastrous.
So the first cause of the crisis lies with the Fed, not with deregulation.
So, how do we get out of this mess? Why, give the Fed more power, of course:
Radical steps by the Fed under chairman Ben Bernanke — all in the name of seeking to halt the panic sweeping financial markets — are turning it into a financial colossus. They’re also putting the government deeper in debt and taxpayers further at risk if the various moves fail.
And it’s being done with little direct interaction with Capitol Hill. The Fed does not depend on Congress for its budget, including its payroll, and is as much a creature of the nation’s banking system as part of the federal government.
This doesn’t raise eyebrows? Any regrets from any representatives out there? Anybody selling gold? Anyone good at bartering because I could use some tips for our new economy.
Ben Bernanke is the scariest guy to come out of Princeton since Woodrow Wilson, who coincidentally created the federal reserve. Well, our political culture has been far too Wilsonian as of late. Historians and liberals hate on Harding and Coolidge, but these presidents were wildly, resoundingly popular presidents because of their isolationist tendencies (Americans hated the League of Nations) and hands off approach to government interference in markets. It is once again time to Whither Wilsonianism.
Want to hear more from the Genius? Here is what Bernanke said in June about our health care system.
Ben S. Bernanke, chairman of the Federal Reserve, told Congress on Monday that health spending would “rise relentlessly” unless lawmakers overhauled the health care system, and he recommended an eclectic approach.
Alternatively, Mr. Bernanke said, Congress could establish a commission like the Federal Reserve Board to set health policy. But, he said, such a panel would need “very clear guidance from Congress,” because health care accounts for “an enormous part of our economy.”
How long would it take for a panel of unelected bureaucrats to suggest nationalizing medicine, ensuring jobs for millions of other unelected bureaucrats? How long would it take Barack Obama and a Democratic legislature to sign on? Hopefully less time than it takes to convert all of my savings into peanut butter, canned goods, and enough ammo to last me through the next four years.
Hat tip:
NT
