Bernanke Is Too Weak to Stay as Chairman of the Federal Reserve

Ben Bernanke proved today that he is too weak to stay as chairman of the federal reserve.

The US is facing the most challenging economic environment in decades, if not generations.

Inflation is spirally out of control, a housing crisis and a looming broader credit crisis are undermining the fabric of our banking system, and consumer confidence is moving lower.  The dollar has moved to all time lows while commodities soar. 

Against this backdrop, the Fed has become a tool of the Wall Street.  Bernanke has lowered rates dramatically to try to make money free again, which is exactly how the credit crisis started in the first place.  Now, with inflation becoming a significant drag, Bernanke should be raising rates quickly and decisively.  Instead he chooses to put his head in the sand.

Where he could have committed to a timetable, like Jean-Claude Trichet, and said inflation is a real risk, it is global and we will stamp it out, Bernanke came out with more weak and indecisive language:

“Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased.”

The dollar will get stronger, housing will stabilize and the US economy will grow eventually.  One day everything will be fine.  You don't need a degree from Harvard to know that.  You also don't need a degree from Harvard to know that that day is only coming when Bernanke is no longer chairman of the Federal Reserve.

 

Jason Rodgers
Jason Rodgers: Jason Rodgers was an experienced research analyst for a major bank prior to retiring to run his own investment consultancy in beautiful Lihue, Hawaii. Jason contributed articles to BestCashCow from 2008 to 2014.

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Comments

  • soczie

    June 26, 2008

    I tend to agree. It is extraordinary that the Fed wasn't more decisive today. I am also amazed that Paulson hasn't intervened on behalf of the USD.

  • ktexas

    June 26, 2008

    I hope Richard Fisher can take over as Chairman. He seems to be the only one at the FOMC who's really concerned about inflation.

  • Sol Nasisi

    June 26, 2008

    I like the decision today. It's not clear whether we are headed for weaker growth of higher prices. I think rates are right where they should be considering this environment.

  • JSmith

    June 26, 2008

    Bernanke wasn't weak when things really hit the fan in March with Bear Stearns. He came up with all sorts of imaginative solutions.

  • Warlock

    June 27, 2008

    Stop the fall of the dollar and you will solve most of the problems we face. Mr. B knows that but he seems to be worried about the politics of the moment. The rich get richer and the poor get poorer. And the middle class, well they eventually will disappear!!!!

  • JRodgers

    June 27, 2008

    We agree that he is denying inflation. Also, he hurting the banks, not helping them, by keeping the yield curve flat.

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