Comments on: Fed up with Bernanke http://blogs.reuters.com/great-debate/2011/12/20/fed-up-with-bernanke/ Thu, 21 Jul 2016 07:57:19 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Otiose http://blogs.reuters.com/great-debate/2011/12/20/fed-up-with-bernanke/#comment-40577 Wed, 21 Dec 2011 22:09:13 +0000 http://blogs.reuters.com/great-debate/?p=11350#comment-40577 Given Wapshott’s recent book his opinions here seem odd.

Bernanke has clearly failed at least in part due to his reliance on Keynesian assumptions. He did not take action to prevent the credit bubble from forming, did not even see the downturn, and when it did arrive failed to understand just how bad it really was. He continues to use methods and tools that are purely Keynesian that those influenced by Hayek would naturally object to and rightly fear.

I’m skeptical of assertions that but for his interventions all would be lost.

So given Bernanke’s record that he should be removed is hardly politicizing the Fed.

Further, a review of the views of the current Board at the Fed reveals a preponderance of people holding similar views as Bernanke. That this imbalance should be corrected with the adding to the Board of people sympathetic with the Hayekian point of view would also seem not to be so much politicization as restoring sound management.

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By: mudpuppy http://blogs.reuters.com/great-debate/2011/12/20/fed-up-with-bernanke/#comment-40569 Wed, 21 Dec 2011 17:25:53 +0000 http://blogs.reuters.com/great-debate/?p=11350#comment-40569 The Fed was politicized when it was improperly given the mandate to keep unemployment low, a mandate no central bank can accomplish without terrible distortions to the economy and eventual high unemployment; see the last twenty years of boom and bust bubbles brought to us courtesy of a Fed trying to manage the business cycle as an exmple.
Moreover the unemployment mandate is often in direct opposition to the more important and achievable mandate of a stable currency. So the already accomplished politicization of the Fed has brought us the worst of all possible worlds.
That the ineptitude of the Fed and the improper role it has been given leads people to wish to get it under control should not be surprising.
What should be surprising is that people are still defending its utter incompetence and chaotic policies which, except for the short time of the Volcker/Greenspan period from 1980 until the S&L crisis of the late 80’s, has been fairly disastrous since the early seventies when the last link to gold was severed by Nixon and Arthur Burns and company began the decades of roller coaster inflation/deflation and asset bubbles we’ve been plagued with.
By the way very few people, left, right or center, Keynesian, classical, supply side, Austrian, whatever, subscribes to the monetarism of Friedman anymore. He was a brilliant man who made many brilliant points especially in critique, and was basically correct about freedom and free markets, but research has called into serious doubt a lot of his monetarist theories including those about the depression.

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By: fresnodan http://blogs.reuters.com/great-debate/2011/12/20/fed-up-with-bernanke/#comment-40567 Wed, 21 Dec 2011 12:46:12 +0000 http://blogs.reuters.com/great-debate/?p=11350#comment-40567 You know, the danger of short term thinking is a serious matter.
But there is also the matter of competance.
http://www.federalreserve.gov/boarddocs/ testimony/2002/20020417/default.htm
So even in 2002, the fact that Greenspan had to address the fear of a housing bubble tells me there were credible arguements for it.

http://www.google.com/search?hl=en&sourc e=hp&q=Greenspan+June+9+2005&gbv=2&oq=Gr eenspan+June+9+2005&aq=f&aqi=&aql=&gs_sm =e&gs_upl=7467l28729l0l29151l21l21l0l5l0 l0l250l2420l5.6.5l16l0&safe=active
another one.

http://www.ny.frb.org/newsevents/speeche s/2007/gei070323.html
my favorite – ask yourself this – Geithner worked at the New York fed, yet he appears clueless with regard to the dangers of derivatives.
Sure, hindsight is 20-20, but these guys are suppose to know this stuff – if they don’t, why do we listen to them?

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By: JoeHitselberger http://blogs.reuters.com/great-debate/2011/12/20/fed-up-with-bernanke/#comment-40560 Tue, 20 Dec 2011 21:24:31 +0000 http://blogs.reuters.com/great-debate/?p=11350#comment-40560 More than “printing money,” chairman Bernanke’s answer to most sorts of economic problems is loose credit. It’s a big distinction. Loose credit stimulates more lending and more debt while printing does not. Both methods increase demand and purchasing power and are thus inflationary. Loose credit is difficult to control and to predict quantitatively because of the presence of fractional reserve banking (the money multiplier) when the economy is expanding. Loose credit has less of a stimulative effect during down times because of the liquidity trap.

The author doesn’t seem to have conceded that the 2008 financial crisis was a natural result of loose credit, credit that both increased debt and risk. It’s time to move on from Bernanke’s thesis. Friedman and Bernanke’s analysis of the Depression and its causes were substantially correct, but Bernanke’s solution is not. As Friedman so famously pointed out, the quantity of money (money stock) was a problem. However, this is problem better solved by positive money (non-debt) rather than loose credit. If you tighten credit and dissolve fractional reserve banking and offset it by adding positive money, then money is far more easily managed. Positive Money is the idea of Positive Money (UK) and a few others. They are far out in front of Chairman Bernanke (and the Republican candidates for that matter). Although Chairman Bernanke is quite smart, there isn’t any indication that he could be scholarly enough to change his thesis in the face of problematic results.

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