In line with the basic rule that few things are more helpful to a political career than catastrophic failure, Ben Bernanke was confirmedby Senate vote for four more years as chairman of the US Federal Reserve System (the Fed) on January 28, 2010.
In persistent denial that it was ample liquidity in the first place that caused the present dire economic situation, the head of the Fed holds the view that “too little inflation” has been the true threat all along. Fear of deflation is Ben Bernanke’s recurrent nightmare. In fact, his deflation worries form the basis of the so-called Bernanke doctrine, which says that the cure is monetary expansion and, consequently, holding interest rates as low as possible.
Since his first days at the Fed, as a member of the Board of Governors in 2002, Bernanke has promised to be a big printer of money. And since he took over the helm from Greenspan as chairman of the US central bank in 2006, he has fully lived up to this pledge.
Among financial-market operators, Ben Bernanke gained early fame as “helicopter Ben.” He announced in a speech in 2002 that the central bank should avoid deflation even by the use of helicopters to drop dollar bills across the land. Indeed, Bernanke’s rule at the Federal Reserve Board has been impressive: his management has yielded a series of wild gyrations in the stock and bond market and the market for gold and commodities. This take-off from the apparent brink of deflation to the heights of hyperinflation is his greatest stunt yet.
Read the rest:
Trouble at the Fed – Antony P. Mueller – Mises Institute.