Bernanke - Pathetic, Duplicitous or Just a Good Soldier?
Of course, he couldn't say that at Jackson Hole. Instead, he had to pretend that his magic was still strong and would be used, if necessary. By customizing mixtures of various powders (some apparently never used before), he would produce potions that would yield proper growth and balance to the US economy.
That Mr. Bernanke has the power to accomplish various things is not doubted. His power to destroy is very real, but his power to create or heal is much less so. Economists know that our economic problems are too much debt, distorted relative prices and mis-allocated resources. Correcting these are not within the Fed's powers.Mr. Bernanke's predecessor, Alan Greenspan, was worshiped and nicknamed "The Maestro" for his presumed ability to manage the economy. The press never bestowed such a halo on Bernanke, but they still provide him undeserved respect. In hindsight, Greenspan is viewed as the man most responsible for the current mess. It is likely the passage of time will not be kind to Mr. Bernanke either.
The Federal Reserve was questionable at its formation. Its creation was arguably unconstitutional, and its track record has been dismal. The ruling elite has always cloaked it in regal or majestic terms in an attempt to justify its validity. It is a valuable tool for government, but not so for the people. Recently the Fed's secrecy and even its necessity have come into question. So has its ability to manage the economy.
One wonders whether Bernanke truly believes what he says. His record of forecasting is dismal, evidenced by numerous, erroneous forecasts. If he is incapable of forecasting existing conditions, what makes him believe he is capable of altering (unknown) future conditions?
If Bernanke believes he can heal the economy, he is delusional. If not, he is a modern-day version of a con-man. The reality is that the head of the Federal Reserve has become little more than an institutionalized version of Elmer Gantry. For those who have seen behind the curtain, any Federal Reserve Chairman is little more than the Wizard of Oz. Unfortunately Mr. Bernanke happens to hold the position at a very difficult time making him appear as a pathetic figure who must pretend to have matters under control. Whether he is merely ignorant or is playing his role as a good soldier is moot.
Mr. Bernanke is destined by history and perhaps his own ego to be a pitiful figure. He is not a bad man or unintelligent. He is in an impossible position. The US passed the tipping point of being able to honor its debt and social obligations around two decades ago. The Federal budget is out of control and adding to the problem daily. There is no longer any way to cover the problem nor escape its inevitable end.
Mr. Bernanke referenced "unconventional methods" at Jackson Hole. Of course there were no specifics. The reality is that we have used "unconventional methods" for the past two years with little to show for it. Some were unimagined both in form and dosages.
What else, other than Bernanke's helicopter drops are left? The Fed is approaching its desperation point. Get ready for "unconventional" QE in dosages never before imagined.