The Federal Reserve said yesterday that it was going to continue doing what it has been doing, no matter how wrong-headed that policy has proven to be.
Those weren’t the exact words, of course. But that’s essentially the message that came out of the Fed’s last Open Market Committee meeting before the presidential election.
Wall Street analysts and TV commentators went through their usual drills. The Fed, they agreed, is being incredibly accommodative and would do anything in its power to make the economy’s boo-boo go away.
It’s the same message we’ve been hearing since our financial troubles began in 2007: meet-repeat-pray. The problem is the Fed has no power to fix the economy. If you haven’t figured that out yet, keep putting together your list for Santa.
As I said in a column a week ago, this presidential election is really about whether or not voters want Ben Bernanke to continue as head of the Federal Reserve.
Mitt Romney, the Republican nominee, has said that if he’s elected Bernanke would be dumped when his term expires.
In the other corner, President Obama has indicated that Bernanke will remain as Fed chairman. But I don’t recall the president saying that recently and I find that omission very interesting.
Within the past two weeks rumors were spreading on Wall Street that Bernanke was really tired of being the Fed’s boss and that he might not want to stay on. Those rumors allegedly came from “friends” of Bernanke who say he and his wife have been griping lately.
Well, that sounds awfully like a guy who knows he’s not welcome anymore so he suddenly decides that he’d like to escape before he spots the guillotine. I remember when I was young, the kid who didn’t get picked for a team (never me, of course) would always stalk off saying, “I didn’t want to play anyway.”
Bernanke may not want to play anymore because, maybe, nobody wants him on the team.
Think about it: Is there really any reason President Obama wants Bernanke around? The Fed chief certainly hasn’t done anything to make the president terribly loyal.
If Bernanke’s policies had actually worked in helping the economy, President Obama wouldn’t be in the fix he’s now in. An economy that was actually showing reasonable growth would have given Obama a lock on four more years.
Bernanke may be pissing off the White House on another level, too. The president, as you probably know, has been accused of wanting to redistribute wealth in this country.
And the Fed’s policies have done just that — only in the wrong direction.
Bernanke’s decision to keep interest rates near zero indefinitely has taken money out of the pockets of low- and middle-class savers and redistributed it to people — typically richer people — who play the stock market.
In fact, there’s every reason to believe that Bernanke’s main object right now is to make stock prices go even higher so that Americans who play the market feel richer.
That’s trickle-down Economics 101 — the rich feel better because of the market, spend money and the rest of us benefit from the better economy that’s supposed to result.
Only it doesn’t work. Or, rather, it hasn’t worked.
Low interest rates do help borrowers. But as a banker said to me the other day on the golf course (relax, it was on the weekend): “Any homeowner who wanted to refinance at low rates already had a chance to do so.”
Low interest rates long ago became useless; now, they are likely harmful.
So Bernanke should have two rooms in the president’s doghouse: one for not fixing the economy and the other for being an ideological traitor in the wealth redistribution game.
And what has Bernanke gained from all this? The economy has had, at best, mediocre growth for years. And this country still is millions of jobs short of a full deck.
Corporate profits and sales have been horrible in the third quarter. And the only statistical bright spot is the housing industry, where the reporting of sales is always unreliable.
I’m going to leave it there. You are probably tired of hearing people like me rant about the Federal Reserve. And I’ll be thrilled when the day comes that I don’t have to write about Bernanke again.
I only wish for one thing: that the next person running the Fed knows how to hit the reverse button on all of Bernanke’s policies.
God help us if he or she doesn’t.
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Romney and Obama have been arguing about what’s to blame for too-high gasoline prices even though there is too much fuel around. Who’s to blame?
Both of them are. And every other politician who takes campaign contributions from Wall Street firms and then lets speculators play with the price of energy futures.
Stop the speculators, and gas at the pump will go down to more realistic supply-and-demand levels.