Bernanke's Money Maneuvers: Federal Reserve Chairman Ben Bernanke's Radical Policies Have Prompted Alarm That They Might Worsen Our Economic Recession/depression
Scaliger, Charles, The New American
For a man who once worked at South of the Border, the kitschy South Carolina tourist trap on I-95, Federal Reserve Chairman Ben Bernanke has come a very long way. From his hometown in Dillon, South Carolina, where young Bernanke turned heads with his academic achievements (he was a spelling champion who competed in the National Spelling Bee, and achieved a near-perfect score on his college entrance exams), the man who was to become the 14th chairman of the Federal Reserve received a Ph.D. in economics from MIT and eventually became the head of the economics department at Princeton University. Along the way, Bernanke, an admirer of the late economist and Nobel Laureate Milton Friedman, developed a profound interest in the Great Depression and its causes. In 2002, not long after he was appointed to the Federal Reserve's Board of Governors, Bernanke, speaking on the occasion of Friedman's 90th birthday, made a startling admission regarding the Federal Reserve's role in creating the worst economic crisis of the last century:
Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve System. I would like to say to Milton and Anna [Schwarz]: Regarding the Great Depression. You're right, we [i.e., the Fed] did it. We're very sorry. But thanks to you, we won't do it again.
Bernanke, like Friedman and other economists of the so-called "monetarist" persuasion, recognizes that the Great Depression was largely created by the policies of the Federal Reserve and other major central banks. But like Friedman and his epigones, Bernanke believes that modern central banking has been "fixed" since then, and that judicious use of the Fed's powers to expand and contract the money supply is not only possible but far superior to the old-fashioned gold and silver-based money system.
It is thus grimly ironic that Ben Bernanke should have been appointed chairman of the Federal Reserve just in time to reap the economic and financial whirlwind resulting from the policies of his predecessor, Alan Greenspan, in cahoots with a federal government that had shown reckless willingness to finance its welfare/ warfare empire via unprecedented levels of debt and deficit spending.
No sooner had Ben Bernanke succeeded Alan Greenspan in early 2006 than the already-shaky U.S. economy, unable to recover from the bursting of the dot.com stock bubble in 2000 and political uncertainty in the wake of the 9/11 terror attacks, began to come apart at the seams. For one thing, even the most foolishly optimistic investors and economists were starting to realize that housing prices had become wildly overinflated and were ripe for a collapse. A few economists and financial advisers, like prominent broker and economist Peter Schiff, began warning as early as 2006 that something much bigger than just a correction in real estate prices was in the offing. Even one congressman, Representative Ron Paul, warned that the real estate bubble was merely one symptom of a much larger problem for which the piper would have to be paid: a wildly inflated money supply and systemic mal-investment that, sooner or later, would have to be liquidated in a massive market correction. But in general, such warnings were brushed aside by the likes of Ben Bernanke and like-minded economists like Arthur Laffer, who were convinced that appropriate corrective steps by the Federal Reserve would be able to ensure a "soft landing" for the U.S. economy.
Spend and Conquer
To understand the disagreement between monetarists like Bernanke and economic thinkers of the so-called "Austrian" persuasion like Peter Schiff and Ron Paul, a bit of history is in order. The standard monetarist explanation for the Great Depression is that the Federal Reserve, instead of pumping more money into the economy as it should have done following the October 1929 stock market crash, instead closed the money spigots, causing a credit crunch that led to bank failures and unemployment on a massive scale. …