Bernanke’s “Remedy”

In this Washington Post article, Ben Bernanke, chairman of the Federal Reserve, makes the case for “good reform” for the Fed. Covertly aiming the whole article at the two bills that would expose the Federal Reserve’s secretive policies, H.R. 1207 and S. 604, Bernanke offers more of the same rather than real reform.


Bernanke writes,



” The Fed played a major part in arresting the crisis, and we should be seeking to preserve, not degrade, the institution’s ability to foster financial stability and to promote economic recovery without inflation.”



The only role the Fed has had in “arresting the crisis” was to postpone it by printing enormous amounts of money and keeping interest rates around 0% in order to paper over the crisis. Surely the Fed can “promote recovery without inflation” in Neverland, but not in the real world. A central bank and fractional reserve banking are most responsible for inflation. With their track record for inflation, no one really thinks that the Fed can promote growth without any inflation whatsoever. 


He continues the charade with, 


“Our supervision is also informed by the grass-roots perspective derived from the Fed’s unique regional structure and our experience in supervising community banks. At the same time, our ability to make effective monetary policy and to promote financial stability depends vitally on the information, expertise and authorities we gain as bank supervisors, as demonstrated in episodes such as the 1987 stock market crash and the financial disruptions of Sept. 11, 2001, as well as by the crisis of the past two years.”


“Grass roots perspective”? Really? Last I checked, there are only 12 Fed regions, or about one every four states (Admittedly, this is a skewed way to look at the division of power of the Fed, but puts into view how ridiculous this “grass-roots perspective” is). Any sensible person would consider that astro-turfing at best. Their astro-turfing has proven them to be remarkably incompetent at “supervising community banks” as 123 have failed in 2009 thus far. The self aggrandizement does not end there. Patting himself on the back, Bernanke cited the Fed’s handling of the 9/11 “disruption” as evidence of their expertise. However, if the issue at hand is really looked it, it can be seen that the aggressive low term interest rate and monetary pumping of the 9/11 disruption played a huge role in the current crisis. 


With a final blow of hypocrisy, the Banker chief goes on to say,


“In its making of monetary policy, the Fed is highly transparent, providing detailed minutes of policy meetings and regular testimony before Congress, among other information. Our financial statements are public and audited by an outside accounting firm; we publish our balance sheet weekly; and we provide monthly reports with extensive information on all the temporary lending facilities developed during the crisis. Congress, through the Government Accountability Office, can and does audit all parts of our operations except for the monetary policy deliberations and actions covered by the 1978 exemption. The general repeal of that exemption would serve only to increase the perceived influence of Congress on monetary policy decisions, which would undermine the confidence the public and the markets have in the Fed to act in the long-term economic interest of the nation.”

If the Fed is as transparent as he says, why is he so opposed to a thorough audit? He fools no one by rambling on about its “transparent” achievements. The Fed only provides “detailed minutes” weeks or months after the meetings with hardly any information of substance. Publishing a balance sheet only shows how much money has been printed. Yes, the American people want to know that. However, they also want to know where all of this money goes to, an inconvenient fact that the head bankers don’t want revealed. Bernanke also misses the main point of the bills proposed by Dr.Paul: Congress wants nothing to do with monetary policy; they only want to know what is going on. 

We need the right remedy prescribed by the right Doctor. Not a phony remedy that will continue all of the same old practices. End the Fed!
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