Truth or Consequences?

In an AP story from OAK BLUFFS, Massachusetts last week, we read that “President Barack Obama announced Tuesday he wants to keep Ben Bernanke on as Fed chairman, saying he shepherded America through the worst economic crisis since the Great Depression.

“‘Ben approached a financial system on the verge of collapse with calm and wisdom; with bold action and out-of-the- box thinking that has helped put the brakes on our economic freefall,’ said Obama, with Bernanke standing by his side.”

Surely the president was reading his teleprompters when he made that silly announcement.

To begin with, Ben Bernanke didn’t shepherd America “through” the worst economic crisis – it would be more accurate to say that he led America “into” our worst economic crisis.

Americans have short memories and short attention spans. If you’ll recall, this “Great Recession” of ours began in December of 2007. That was the official proclamation from the nation’s leading economists. Good. You remember that.

But Ben Bernanke was installed as Chairman of the Board of Governors of the Federal Reserve System ‘way back on February 1, 2006. His “bold action and out-of-the-box thinking”, therefore, is what shepherded America over a 22-month period to that fatal December 2007 date – and “into” this worst economic crisis, not “through” this worst economic crisis.

On August 26th, the day after the announcement from Oak Bluffs, The BUSINESS TIMES published some reactions from members of the Senate in Washington:

“Bernanke nomination draws fire from US Senate critics”, the story began.

“Some US Senators expressed worries or outright disgust on Tuesday at President Barack Obama’s announcement that he was nominating Federal Reserve Chairman Ben Bernanke to a second term.

“Mr. Bernanke ‘was too slow to act during the early stages of the foreclosure crisis,’ said Senator Dodd, who added that ‘he had serious concerns about the Fed’s failure to protect consumers’.”

“The top Republican on the panel, Senator Richard Shelby, said the hearings should include questions about the Fed’s role in the US response to the global financial meltdown sparked by a collapse in the US housing market.

“The committee ‘should carefully examine the impact of the Fed’s failures as a bank regulator, how such failures contributed to the financial crisis, and whether Chairman Bernanke has the strategic vision to chart the necessary course going forward and the resolve to stick to it’, said Sen. Shelby.

“But independent Senator Bernie Sanders charged that Mr. Bernanke had been ‘asleep at the wheel’ while the global economic meltdown developed and ‘did nothing to move our financial system onto safer grounds.’

“Senator Sanders, who sits on the Senate Budget Committee, accused the Fed chief of abetting ‘the greed, irresponsibility and illegal behavior of Wall Street.’

“‘We need a chairman of the Federal Reserve who is more concerned about expanding the positive economy – increasing decent-paying jobs for all Americans – than continuing to fan the flames of Wall Street greed and outrageous compensation packages,’ the lawmaker said in a comment.

“And Republican Senator Jim Bunning accused Mr. Bernanke of helping Mr. Obama rather than being an independent central banker and bluntly declared: ‘I don’t think he deserves another term as chairman of the Federal Reserve.’

“He accused Mr. Bernanke of ‘acting as an arm’ of Mr. Obama’s Treasury Department and supporting Mr. Obama’s ‘out-of-control spending policies that have led to America’s mounting debt and will put the taxpayers trillions of dollars more in the red.’

“Mr. Bernanke ‘lacks the independent voice we need in a Federal Reserve chairman and has refused to provide any sort of transparency or accountability to the American people when it comes to who exactly the Fed is lending to and how much they are lending,’ said Senator Bunning.

“Senator Bunning is a member of the Senate’s committees on Financing as well as Banking, Housing and Urban Affairs.” [Jim Bunning is also a member of Baseball’s Hall of Fame!]

– Senator Dodd thinks that the “foreclosure crisis” is the central issue in our economic crisis;
– Senator Shelby has questions about the Fed’s role in the US response to the global economic meltdown which, he feels, was sparked by a collapse in the US housing market;
– Senator Sanders chief concern is that Mr.Bernanke didn’t protect our financial system;
– And Senator Bunning is concerned about how the Fed is spending the taxpayers’ trillions.

Housing, the global economic meltdown, our financial system, and the taxpayers’ trillions are of little “consequence” in determining the cause of this worldwide economic free fall. They are more accurately described as “consequences”.

Senator Sanders got it right, though, when he said the Fed chairman should be more concerned about “increasing decent-paying jobs for all Americans”. It isn’t the Fed chairman who is in a position to create millions of decent-paying jobs, however – only the U.S. president has that kind of authority – and there is a precedent for the president. We’ve been here before. Wall Street interests brought on the Great Depression of the 1930s, just as Wall Street interests have brought on the Great Recession of the 21st Century – the precursor of the coming Great Depression of the 21st Century. The precedent – our Emergency Shipbuilding Programs – initiated by our president – FDR – led us out of that ’30s Depression, and only a 21st Century Emergency Shipbuilding Program initiated by our current president – Barack Obama – can avert an impending catastrophic Depression.