Go to PDF Version | Go to Recent Issues
To save time in the future, you may select one of the preferences below. You may update your eIBD preferences at any time by going into My IBD and selecting Update Your eIBD Preferences.
Set Web-Based Version as Default Set PDF Version as Default Set Recent Issues as Default
Get QuoteSearch Site
Daily Graphs Online
Monetary Policy: We're well-acquainted with the many reasons that have been given for firing Federal Reserve Chairman Ben Bernanke. But, for the sake of the economy, he deserves another term.
Looking for bipartisanship? Bernanke, whose term as Fed chairman expires Sunday, has become a convenient target for liberals and conservatives. That's why he'll get a lot of "nay" votes when the Senate considers his nomination Thursday.
While we won't defend every move Bernanke's made since taking over the Fed in early 2006, we think he's been unfairly scapegoated for the financial meltdown. Remember, he started just as the housing boom was going bust. Wall Street, Congress, the American people all froze. Treasury was hamstrung by its own indecision.
In that environment, the Fed became not just the lender of last resort and guardian of our currency, but, because of Congress' ineptitude, the de facto economic policy tool of last resort.
It's said the Fed held interest rates too low leading up to the housing bust and financial meltdown. Indeed, starting in mid-2000, the Fed cut rates from 6.5% to a then-45-year low of 1% in June 2003. This, it's argued, created the housing boom.
But, as with all things, there's a longer-term context.
Recall that after the stock market's crash in 2000, the ensuing Clinton recession and the 9/11 attacks, many feared the economy might collapse. Americans were frozen in fear of terrorism and reeling from the $8 trillion in wealth lost in the market crash.
With the economy sluggish, Congress and President Bush did the right thing, cutting taxes in 2003 to prod a recovery. To help, Fed chief Alan Greenspan slashed interest rates.
In hindsight, it's possible to argue rates stayed too low for too long, helping inflate the housing bubble. But Bernanke didn't make that decision. As for those who think rate cuts he engineered starting September 2007 were a mistake, they forget the sheer panic that gripped the markets for nearly two years. We don't.
As we've argued repeatedly, the housing bubble was almost entirely a creation of Congress. It coerced private banks into lending to homebuyers who were bad risks, then pushed Fannie Mae and Freddie Mac to buy the bad loans from the banks. This folly hit a crescendo in 2006, just as Bernanke took over.
It's easy to forget the Fed did not regulate Bear Stearns, Lehman Bros., Merrill Lynch, AIG, Fannie Mae, Freddie Mac or any of the other firms that made big financial errors. So blaming Bernanke for a "failure of oversight," as some do, is simply wrong.
On the very same day this week when the Congressional Budget Office warned that the succession of previously unimaginable trillion-dollar-and-more budget deficits could inflict ruin on the United States, the Senate faced a moment of truth. For the first time, a truly bipartisan proposal aimed at ...
Labor: In voting to raise taxes to fund health benefits of public-sector union members, Oregonians have taken some of the shine off Scott Brown's victory in Massachusetts and set a potentially dangerous precedent. Opposition to tax hikes was one of three positions that Sen.-elect Brown took ...
Global Warming: If we're serious about restoring science to its rightful place, the head of the U.N.'s panel on climate change should step down. Evidence shows he quarterbacked a deliberate and premeditated fraud. The U.N.'s Intergovernmental Panel on Climate Change has been forced to back ...
Health Care: Like a movie vampire, big-government health reform keeps coming back to sink its teeth into a resistant America's throat. Voter power has left the Democrats' plans near dead, but near isn't good enough. The axiom "the people rule" came to life in Massachusetts when our system of ...
Despite the president's efforts to put a better face on the disaster, the Congressional Budget Office tells a frightening story of an already-too-large public debt rising precipitously from 41% of GDP in 2008 to at least 92% in 2020 largely because of: (1) About $2.7 trillion of what was ...
Posted By: bowl of scabs(15) on 1/27/2010 | 11:56 PM ET
We would need no FED oversight if the dollar was simply representative of a static amount of gold. Interest rate would be determined by supply of savings and demand of credit. It's that simple. Who runs the FED should not matter. The FED's existance should be the real issue. But after Bernanke doing the opposite of the right thing over and over again, when he's back on the streets I wouldn't hire him to pull weeds on my farm.
Posted By: poptoy(25) on 1/27/2010 | 10:49 PM ET
Keeping Bernanke is or is not the answer. The answer is to get rid of "The FEDERAL RESERVE BANK". It is misnamed to begin with. As Biglron said above the FED is a cartel of banks that every bank in this nation has to borrow from. This cartel is made up of some banks that actually got loans in the TARP ordeal. How does something as idiotic as that happen? Do as JFK wanted to do. Get rid of the FEDERAL RESERVE SYSTEM. Plain and simple. Oh by the way get Rid of the Kenyan in 2012 also.
Posted By: BigIron(220) on 1/27/2010 | 10:04 PM ET
NO AUDIT! NO BERNANKE! Absolutely! No compromise! The FED, a cartel of private banks, needs an open audit after 97 years of operating in the shadows with no oversight. I think that what we find out by that audit will make even the most "milk-toast" among us become lions. It, absolutely, must be done! Thanks, Ron Paul, for your perseverance in this matter; you serve your Country well in this. NO AUDIT! NO BERNANKE! Absolutely! No compromise!
To participate in Community areas, please Sign In or Register
Register
Avoid laggards even if their group is strong.
Get QuoteSearch Site
Read Full Article »