News is now emerging that Bernanke is lobbying for his new term as head of the Fed, and will be re-nominated by Obama today.
As I noted previously, Bernanke has been wrong in his outlook and prescription for the economy since 2005. How sure can we be that his current prescriptions for the financial crisis will be the cure? The even bigger question is: how likely is it that government intervention at such a scale can possibly get it right?
I am afraid we can be sure that the Fed will continue to be the problem, and will continue to destroy wealth for everyday Americans, while supporting constituencies: its members and the government. (Members benefited from the Fed bailout -- look at the NY Fed roster - GE, JPMorgan, etc.)
The Fed and its system is an enormous government intervention that we have had now since 1913. Since it was created, it shifted control of money and interest rates to the government. Since then, we are assured of wild booms and busts, and persistent inflation. The Fed cannot be neutral, as it is a government controlled body. So it bends policy to befit its members, and to support government spending.
The Fed members are a closed shop of financial and government appointees, even though the theory was that The Fed was supposed to be independent of government. With so much government control of banks, the banks, who elect members, are under the thumb of government to pack the Fed's 12 regional boards.
So yesterday, we have Denis Hughes, president of the NY AFL-CIO joining the New York Fed! AS THE CHAIR! Welcome Labor to control of interest rates! What ever happened to free market for money? I guess we will not see that until we abolish the Fed, which is unlikely to happen.
The Fed is generally regarded as a positive and stabilizing force in the economy, but trust me, they are an insidious and destructive government intervention ... and they almost always get that intervention wrong.
Fasten your seatbelts.
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