12.31.2009 0

Time to Bring the Federal Reserve to Heel

  • On: 01/25/2010 09:52:54
  • In: Monetary Policy
  • By Bill Wilson

    Sometime in the next ten days the U.S. Senate will vote on whether or not to give Ben Bernanke a second term as Chairman of the Federal Reserve. The only honorable and right thing to do is to reject his nomination.

    Depending on your political point of view there can be any number of reasons for removing him from his post. Conservatives can fairly lay much of the blame for the constant “bubbles” that have erupted as a result on his policies squarely at his feet. His interventions into the market place to pick winners and losers have been the very antitheses of a free-market economy and the cause of so much of our misery today.

    The Left has no more love for this man or his failed policies than do conservatives. Writing in Open Left, Chris Bowers makes a compelling case from their vantage point. Bowers’ appeal rings true:

    “Anyone opposed to the current economic status quo from any political perspective should be opposed to Bernanke’s reconfirmation. Voting to confirm him just says that you think the economy did just fine from 2005-2009, and that the government’s actions before, during and after the meltdown was just hunky-dory.”

    Amen, comrade! Bowers left out only one item; the role of the Federal Reserve is causing the meltdown in the first place aided by toxic governmental policies.

    So, just looking at the record, there is zero justification for reconfirming Bernanke. Applying the Taylor rule, interest rates were kept too low for too long as the Fed increased the supply of dollars, thus accommodating the housing bubble that, when it popped, wrecked the economy.

    As bad as the Fed’s role in causing the current crisis was, there is a larger and more fundamental reason to reject him. It is long overdue that the elected representatives of the People of the United States tell the bankers, international financiers, and the masters of the universe that they do not run America, America runs them.

    The Federal Reserve System was unwisely handed a monopoly grant of power by the People of America. But that grant of power was not and is not independent of those that gave it. The Federal Reserve is to be our servant, not our master.

    In all the arrogance and disdain those associated with the Federal Reserve show towards the people of America lays the heart of the problem. They believe down to their bones that they have the right to do as they please, free of any oversight or accountability.

    One need only look at the reaction to more than 300 members of the House of Representatives demanding an audit to see what they think of us. Their total refusal to comply with the smallest request for information is a sure sign that they have something to hide or believe the “little people wouldn’t understand” or both.

    Conservatives and socialists can (and will) have our fights over economics, government spending, and all that goes with it. But we can only have these debates if the outcome matters, if the final decision can actually affect people’s lives. As long as the Federal Reserve maintains its current imperious posture, it really won’t matter who wins such debates—they just do what they want and the People be damned.

    For the Ben Bernanke’s of the world, all of us are just rats in a cage, reacting to the prods and probes they stick to us. It will not end, regardless of the economic policies or political decisions, until the Federal Reserve is forced to accept their proper role.

    Setting the terms of that proper role requires and demands the removal of Ben Bernanke followed immediately by a full and open audit of exactly what these people have committed the American people to. Once we have a clear-eyed view of the real damage they have done to us all the work of cleaning up the mess can begin.

    Cleaning up that mess starts with the defeat of Ben Bernanke.

    Bill Wilson is the President of Americans for Limited Government.

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