Massachusetts Daily Collegian

Bernanke is the wrong man to manage our money

By Kevin Gallagher

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As the Senate voted to raise the federal debt ceiling to $14.3 trillion and President Obama prepared to deliver his State of the Union address, Federal Reserve Chairman Ben Bernanke was voted into a second term yesterday. Despite Senators on both sides of the aisle pledging to block his reconfirmation, Bernanke won another four years in the position, having been previously appointed by George W. Bush.


The issue of the Fed’s independence has long been contentious among political observers in and out of Washington. Since its creation in 1913, the Fed has controlled the nation’s money supply without oversight from Congress. In 1978 it received a dual mandate from Congress to combat unemployment and inflation.


The Fed’s critics associate Bernanke’s reign with an era of easy money and low interest rates, which fueled speculation in the housing bubble. His supporters, such as the president, claim he was given a tough job and has instituted policies that averted a lengthy depression. At a hearing last year, Bernanke himself sympathized with public outrage over out-of-control spending, expressing his anger at the AIG bailout. But to many he is seen as continuing the legacy of Alan Greenspan, whose confidence prior to the recession forced Greenspan to admit that he had overlooked a “flaw” in our economic system.


Bureaucrats at the Treasury and Federal Reserve defended their unprecedented actions with the “systemic risk” and “too big to fail” arguments, but they failed to recognize what got us here. It is without question that we lived beyond our means and borrowed excessively in past decades, with only the illusion of wealth. Sooner or later, a market correction has to occur, despite propping up toxic assets and reinflating the bubble with easy money. Bernanke’s academic expertise was the Great Depression, so he should know this.


The Austrian School of economics has a theory of the business cycle which explains how artificially low interest rates cause excessive credit and speculative bubbles. The fault that is attributed by this administration to a failure of capitalism or the greedy risk-taking of private banks is more accurately ascribed to the larger force operating behind the scenes, the Federal Reserve. While we should not expect any change in direction from them, fortunately Obama has recently proposed something called the “Volcker rule” which would prohibit commercial banks from owning hedge funds or private-equity firms. This corrects one of the mistakes that led to the economic crisis – the repeal of Glass-Steagall in 1998. Investors hope the Fed will pursue a sound exit strategy from intervention, eventually raising rates and ending the practice of quantitative easing.


But more decisive measures are needed. Last year, Congressman Ron Paul introduced a bill intended to audit the Federal Reserve, which by now has picked up 317 co-sponsors and bipartisan support. In particular, the audit is aimed at finding out what kind of agreements the Fed has with foreign central banks, as much of the Fed’s most crucial actions are shrouded in secrecy. It is true that since the economic crisis, the Fed has expanded their balance sheet to over $2 trillion. Movements like “End the Fed” coincide with the Tea Party protests and increasing anti-government sentiment as a reaction to deficits and spending in Washington.


The bill’s opponents have charged that giving Congress more oversight over the Fed would interfere with the ideal independence of monetary policy from political influence. Supporters responded that, just as the Fed releases the minutes of their meetings months later, that Congress should only be allowed to review decisions in retrospect, and that the proposed audit is not intended to influence or politicize monetary policy.


Many of the founding fathers, including Thomas Jefferson, presciently warned about the dangers of central banks. The Federal Reserve is controversial today for the same reasons that the Second and First Banks of the United States were. Fiat, or paper money, is only money because the government declares it to be, and is not tied to any commodity like silver or gold. We owe that to the breakdown of the Bretton Woods system in 1971.


While the Fed’s creation was intended to prevent bank runs and investor uncertainty, they have given us only assurances that they will continue to print money recklessly. There is a concrete question of moral hazard in the trend of bailouts, a risk of future inflation and rising unemployment, and meanwhile the central bankers seem to have forgotten about fiscal restraint – adopting instead whichever stance is most convenient for their buddies on Wall Street. Until we can know what they are doing with our tax dollars, we should not put any faith into the central bankers’ ability to manage the economy.

Kevin Gallagher is a Collegian columnist. He can be reached at [email protected]


3 Responses to “Bernanke is the wrong man to manage our money”

  1. Marc on January 29th, 2010 2:01 am

    The question should not be Bernanke out or in….

    It should be what were the obscene circumstances that allow the private international banking families to infiltrate themselves into the borrowing the United States money (that it creates out of thin air’ & for that privledge we pay them interest through the unbelievable process of taxing our working lives.

    Why not a consumption tax on raw goods that we buy ? Because 97% of the wealth & means of production is held by 1% of an elite population. They don’t want to pay people ! Wake up & stop being pop culture morons.

    Chavez tells Haiti that he doesnt require payment on their debt to Venezuela & the next day we see more fake demonstrations by Venezuelan ‘protesters’ telling us in the USA ….

    how terrible it must be to live under a system that actually allows oil profits to benefit the people of that country.

    Have you ever seen the beauty contestants from Venezuela? They don’t exactly look like they are miserable. lol

    Same with Norway. USA has been dumbed down to an incredible level.

    World citizens should be raging against 1% controlling so much.


  2. wingnut on January 29th, 2010 7:29 am


    A bit about the rat-racing system called “economies”. Keep in mind that every AmWay survival coupon (dollar) has “Federal Reserve Note” written on it, and has no title of ownership. It can’t be owned by the public. I believe that the pyramid scheme symbol on the back of the USA dollar… is from the Colombian Freemasons… and the USA gov is located in a “district of Colombia” and thus… is not part of the USA. All dollars, titles, and businesses using dollars, are owned by the organization who runs the free marketeers empire/imperialism/corp. They/it also allow and make police-gun-backed (private?) ownership exist, even though everything purchased using THOSE greenstamps is REALLY owned by AmWay/American Way/New World Order Inc.

    There is no such thing as “your hard-earned money” or “taxpayer dollars”… those are self-lies. The free marketeers are owned by the free masons (makes sense, eh?) and the papers used by those who have signed-aboard that game/org… are owned by the folks at the top of that pyramid scheme (the free marketeers). I’ve been anti-capitalist, anti-ownership, anti-economy from the get-go, so whatever the sign-aboards do with their pyramid scheme of inequality/rat-racing… doesn’t matter to me at all. They’ll have to answer-up for it in afterlife. I won’t. I avoid using free mason survival coupons (USA greenbacks) at every place/chance I can pull it off. But, by having free mason coupons as the only legal tender currency in the USA, I’m forced to deal with their coupons and their entitles of ownership to a certain degree. The police are involved in their cause… and many laws are contoured for the capitalist/ownership junkie. The parents are also involved, reversing policy from share share share, to fight fight fight when USA kids are sharktanked into capitalism at age 18… via the felony extortion “join the free marketeers, or starve” (get a job or die).

    Time to level the felony pyramid scheme called capitalism. Abolish economies and ownershipism worldwide, and hurry. Economies just cause rat-racing, and rat-racing causes felony pyramiding. BUST IT, America! Look to the USA military supply/survival system… (and the USA public library system) for socialism and morals done right. Equal, owner-less, money-less, bill-less, timecard-less, and concerned with growth of value-criteria OTHER THAN money-value. Quit doing monetary discrimination immediately, and make it illegal. There are MANY measurement criteria of “value”… not just dollars. Try morals, efficiency, discrimination-levels, repairability, etc etc. Economies are cancerous tumors, and to cheer for their growth… is just insane. Profiting causes inflation, so if caps LIKE inflation, and if they LIKE a terrible time in afterlife when they meet the planet’s ORIGINAL OWNER before caps tried to squat it all with ownershipism, then keep it up with the felony pyramiding. I dare you. While us Christians are finally bulldozing that pyramid scheme back to level, lets make servitude and “join or starve” (get a job or die) illegal in the USA, and lets level the architecture seen in USA courtrooms, too. Right now, USA courtrooms are church simulators or “fear chambers”, by special design. Sick.

    Think about the “separation of church and state” unwritten law donned by capitalists like a garment. Lets say there were two main churches in countries that use economies. The church of cooperators, which means Christianity, communes, commun-ity, commun-ion, communication, economyless socialism, potlucks, barnraisings, Amish, Quaker, Mennonite, equality like that in the USA military supply/survival system, and equality like that seen in the USA public library system, and lastly all ethics/fairness officer slots seen/found in current business (none). We’ll call that whole group… the cooperators’s church. THAT is the church that is separated from “state”, whatever state means. Now lets look at the OPPOSITE church, the competer’s church, or in other words, capitalism and economies in general. THAT group, has actually MERGED with state. The competer’s run the government, not the nuns and farm moms who love everything unconditionally. When you look at capitalism as a competer’s church, its easy to see how many force-ins there have been and continue to be. Since when is forced religion not a felony? Yet we’ll do about a million “get a job or else” (join the competer’s church, or die) this week alone… to our 18 year olds. Why? TRADITION, as Topol would say. The tradition of the competer’s church, which, if you look at it, is also the forsakers and handwashers church. The me me me, my my my church of ego-centrics. My house, my car, my kids, my doctor, my lawyer, my husband, my lunchbreak, my cigarette, my coffee and doughnut, my divorce, my my my my my. Few capitalism buy-ins or force-ins… will admit-to or own-up-to that, though. Yay America, yay us. (yikes)

    All pyramids collapse.. including capitalism/AmWay/American Way. We learned it early-on, in the playgrounds and farmyards, as children. When stacking children into servitude-infested pyramids, the upper 1/3 is “heads in the clouds” while the kids on the bottom get crushed from having the weight of the world’s knees on their backs. Allowing/joining/condoning/promoting inequality systems such as the monetary-discrimination-infested and servitude-infested capitalism pyramid scheme… is also about as immoral as it comes. Folks should be ASKED to work WITH others and not FOR others. The Earth creators are watching. Not a single other living thing on the entire planet… uses economies. Why do capitalists? Be ready for rough water in afterlife, capitalism users/condoners (non-force-ins).

    Larry “Wingnut” Wendlandt
    MaStars – Mothers Against Stuff That Ain’t Right
    Bessemer MI USA


  3. ageis on January 29th, 2010 12:00 pm

    Marc, I don’t understand how you can decry the wealthy top 1% but not be concerned about the elite bankers who are helping out Wall Street instead of Main Street. It is true that capitalism concentrates wealth in fewer and fewer people. But it also functions superior in generating a higher standard of living for everyone than socialism. The government exists to try and mediate some of its flaws. Monetary policy can actually be used to effect a more equal distribution. Think about how in particular, the phenomenon of inflation robs the middle class, and makes it impossible to save. When your economy is based on credit and borrowing instead of savings and production, you are just going to be piling more and more problems on (money printing press), without fixing the flaw in the foundation. Consider the possibility that globalization is good, because it spreads economic opportunity to other countries.

    wingnut, you are rather all over the place and I find your name appropriate. While I applaud your use of other currencies, this article doesn’t advocate economic growth, it advocates sensible monetary policy. Growth occurs at the expense of the environment and labor to create goods. Unfortunately this country doesn’t make anything anymore, partly because unions and the workers movement have driven the cost of labor up. It seems like you are advocating communism while being afraid to use the word. Just cut to the point and admit that’s what you want.


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