Contra Bernanke

The politically astute Chairman Bernanke took to the editorial pages of DC's premier political organ to complain about political interference in our very political Federal Reserve System. With a piece worthy of both fine Wall Street PR and DC political class propaganda, the Chairman tells the American people, "Hands-off the Fed!" The Chairman repeats the now time-tested mantra that the Fed "avoided financial collapse last fall," though fails to confront the ways the Fed was culpable for the financial collapse, and there was no institution more singularly responsible for the financial crisis than the Fed. Yves Smith does some Fed accounting.

Now a few years back, it would seem fairly unseemly for a Fed chief to be in such a open political brawl, but that was before the era of Alan "Bubbles" Greenspan, who by the end of his term was pronouncing on pretty much everything under the sun. I think he even had his own line on Sunday football picks by the end. Of course, Mr. Greenspan's pronouncements were always to be problematic for his successors. He broke one of the cardinal rules of the temple, say little, keep an air of mystery. If the Fed became too familiar and everyone understood how banks operated, we'd all want to be bankers, and we can't all be bankers. At least that's one lesson we should have learned from the last couple decades.

Mr. Bernanke say he's worried about "short-term" political influence. Of course, he doesn't have to worry about long-term political influence. Such issues were taken-off the table with the founding of the Fed. All such issues involving the monetary policy of the United States were placed firmly in the hands of Wall Street and the banks, and outside of the 1930s, have rarely been challenged. In fact, Wall Street and the banks, with the Fed's very active political involvement, pushed last several decades of "financial innovations, which were all about taking-back the power forced from them during the 1930s. Mr. Bernanke has been very proud of his policies of trillions for Wall Street and the banks, and not a penny for mortgage modifications, that in a nutshell is the politics of the Fed.

There are other ways to conduct monetary policy, however you'd need a simultaneous discussion on what government is in the 21st century, but that's not forth coming either. In fact, after the nastiness of last fall, you know the panic of the global financial elite and that November election, it seems things are right back on course. This week we'll get an increase in troops in Afghanistan and the reappointment of Mr. Bernanke. If things keep going on the straight and narrow, we can start talking about how we're going to pay for all this, like cutting Social Security, that's change you can believe in.