Sunday, January 24, 2010

Secrets Of The Temple

During the past few days, the Fed's defenders have been out in force with contemptible predictions of financial armageddon if the Senate fails to confirm Bernanke. One of the associated talking points is that Bernanke needs to stay in order to turn back political encroachment on the Fed's "independence." The WSJ's Jon Hilsenrath shows why this is specious (my bolds):

No matter how it plays out, Ben Bernanke's bruising confirmation battle has damaged the U.S. Federal Reserve's clout and perceived independence.

Mr. Bernanke is more than the Fed's chief decision maker. Fed officials see him as their brand, a smart, honest and stoic voice best able to defend decisions of the past two years to a skeptical Congress and public. Even if the Senate backs Mr. Bernanke this week, he won't speak with the same authority, and the Fed will have a harder time casting itself as above partisan politics.

[T]he longer the battle drags on, the more it could interfere with the Fed's ability to communicate convincingly. And no matter what, the Fed will have less sway as Congress debates whether to rein in its powers.

Because he is so controversial and by going to the wall on this nomination battle, Bernanke has weakened the Fed and hurt its independence. If he's ultimately confirmed, that independence will suffer even more simply because of his presence. Would Bernanke's defenders argue, for example, that Volcker wouldn't be more effective than Bernanke at this point in fending off a Fed audit? Moreover, since viable, effective monetary policy depends on a Fed chairman having overwhelming bipartisan support -- clearly an impossibility if Bernanke is somehow confirmed -- those supporting this nomination put both the Fed and the economy at risk.

Bernanke and his defenders know all this. So their motive cannot be economic stability and it certainly can't be "Fed independence" (if Bernanke was really concerned about the latter, he would have asked Obama not to nominate him for another term). And while Wall Street obviously wants Bernanke to stay and this accounts for part of his support, there has to be something else going on.

Why the urgency and desperation to keep this one man in his job?

6 Comments:

Anonymous KAIMU said...

ALOHA !!

I have to ask ... "What monetary policy?" As I see it, ever since the US FED has been in charge the monetary "store of value" has been decimated. To the point where our money is purely a "store of debt" and nothing else.

All Volcker ever did was convince those who held gold as money to sell, Add in a few COMEX tricks and the abyss was averted, but was it really? The only function of the US Treasury and the US FED is to buy time. What both these institutions do now is PRICE FIX in an effort to stall the inevitable LONG EMERGENCY monetary crisis.

Emergency politics has been a mainstay for many decades. Just ask FDR! There has never been any lack of central government and central bank emergencies. Try "de-centralizing" ...

1/24/2010 11:27 PM  
Anonymous XYZ said...

From today's WSJ:
"The president himself, as well as Mr. Geithner, Chief of Staff Rahm Emanuel and White House economic coordinator Lawrence Summers, made phone calls to key senators over the weekend. So did Mr. Bernanke. "

Gotta love Bernanke personally making phone calls to key senators for his own reappointment. Fed independence personified.

Gotta love Obama calling up senators to campaign for Bernanke but won't pick up the phone to rally support for his own healthcare bill.

1/25/2010 12:24 AM  
Anonymous Anonymous said...

Because they're their own cause -- the only thing they care about. The political class is loyal to the political class.

1/25/2010 1:38 PM  
Anonymous Anonymous said...

Bernanke knows where the bodies are buried?

1/27/2010 10:32 AM  
Anonymous Anonymous said...

酒店兼職 酒店打工 打工兼職 台北酒店 酒店兼差 酒店經紀 禮服酒店 酒店工作 酒店上班 酒店PT 酒店應徵 酒店

2/22/2010 2:51 PM  
Anonymous tokyo escorts said...

The author is completely just, and there's no suspicion.

5/23/2011 11:37 AM  

Post a Comment

<< Home