Bernanke asked five questions of himself and gave five self-serving responses, all absolving the Fed of its role in the global financial crisis.
Bernanke also patted himself on the back numerous times (indeed in the answers to nearly every question).
In particular, Bernanke bragged about the inflation-fighting prowess of the Fed, not pointing out the Fed and fractional reserve lending are the source of inflation.
Direct Lies
In the direct lie category, Bernanke stated "The Federal Reserve is also very open about its finances and operations."
In reality, it took freedom-of-information lawsuits from Bloomberg and others to get information from the Fed. The Fed still does not want to be audited.
Here are a couple of key snips regarding monetary and fiscal policy.
Pledge To Hold Rates Low
In the category of communications policy, we also extended our estimate of how long we expect to keep the short-term interest rate at exceptionally low levels to at least mid-2015. That doesn't mean that we expect the economy to be weak through 2015. Rather, our message was that, so long as price stability is preserved, we will take care not to raise rates prematurely. Specifically, we expect that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economy strengthens. We hope that, by clarifying our expectations about future policy, we can provide individuals, families, businesses, and financial markets greater confidence about the Federal Reserve's commitment to promoting a sustainable recovery and that, as a result, they will become more willing to invest, hire and spend.
Bernnake Begs Congress to Address "Fiscal Cliff"
I certainly don't underestimate the challenges that fiscal policymakers face. They must find ways to put the federal budget on a sustainable path, but not so abruptly as to endanger the economic recovery in the near term. In particular, the Congress and the Administration will soon have to address the so-called fiscal cliff, a combination of sharply higher taxes and reduced spending that is set to happen at the beginning of the year. According to the Congressional Budget Office and virtually all other experts, if that were allowed to occur, it would likely throw the economy back into recession. The Congress and the Administration will also have to raise the debt ceiling to prevent the Treasury from defaulting on its obligations, an outcome that would have extremely negative consequences for the country for years to come. Achieving these fiscal goals would be even more difficult if monetary policy were not helping support the economic recovery.
Bernanke Tosses Monetarist and Keynesian Hats Into the Ring
Although Bernanke does not want Congress meddling in monetary policy at all, he meddles in fiscal policy all the time. Bernanke cannot make decisions or pass laws, however, Bernanke is clearly warning Congress the alleged "Fiscal Cliff" of tax hikes and automatic budget cuts "would likely throw the economy back in recession".
I suggest the US economy is already back in recession. Regardless, Keynesian and Monetarist clowns (Bernanke wears both hats when he attempts to manipulate Congress), never want to do anything "now" to fix structural problems.
Indeed, Bernanke does not even want to do anything until at least mid-2015 regardless of what the economy is doing.
If you want to know why the boom-bust cycles have ever-increasing amplitudes and troughs, look at the policies of the Fed.
Bear in mind that I side with Bernanke that price inflation is not going to get out of hand. However, His policies have destroyed those on fixed income (a claim he tries but fails to address in his five questions). More importantly, those with first access to money (primarily banks and the wealthy) are the biggest beneficiaries of monetary printing exercises.
Those wondering how the 1% got so wealthy need only look at the Fed for the answer.
That was a question Bernanke did not address, but I addressed in detail a few days ago in Can the Fed Fight Droids and Win? Apple's SIRI, Driverless Trucks, What's Next? Riveting Video: Are Droids Taking Our Jobs?
Please take a look at that post if you have not yet done so.
Mike "Mish" Shedlock
"Wine Country" Economic Conference Hosted By Mish
Click on Image to Learn More
