Monday, August 10, 2009 4 comments ++[ CLICK TO COMMENT ]++

Opinion: Ben Bernanke should be re-appointed

I'm not an American and it's up to Americans to decide who they want running things. But here is an opinion from a neighbour up north :)

I think Ben Bernanke should be re-appointed as chairperson of the Federal Reserve. I think it's ridiculuous that some are pushing for Lawrence Summers, who is probably the #2 candidate right now. Lawrence Summers is favoured by some Democrats, who view Bernanke as being cut from the Republican cloth and incompatible with their policies.

There is a reason I gave the 3rd place Super Duper Management Turtle award to Ben Bernanke earlier this year. I would be the first one to admit that Ben Bernanke made a significant error with the housing bubble. No way to argue against that. But I think many ignore a major call he made last year in the early stages of the crisis. Let me quote what I said earlier in the year:

Bernanke made a major contrarian call that everyone is ignoring. He, similar to my view early in the year, felt that inflation was a lagging indicator and wasn't something to worry about. Recall that commodity prices were skyrocketing at this time. He turned out to be right. In lesser hands, the central bank may had done something disastrous at that time, such as significantly boosting interest rates or sharply contracting the money supply.

Although some (the loose money crowd) have been critical of him for not expanding the money supply, I think he was ingenious in buying assets while selling Treasuries. Selling Treasuries is unusual but this move prevents inflation (since you aren't really increasing the money supply.) Increasing the money supply is easier now but it was quite risky a few months ago when commodities were still strong and speculators were ready to crush the US$, so that's a bold move by Bernanke.


So, yes, he made a serious error with housing—so did 90% of the population, including "the market" itself. But I think he made it up with his actions in the last two years.

I have to admit that I'm somewhat biased here. I lean towards deflation and therefore feel that someone like Ben Bernanke is far more skilled in that scenario. Someone like Lawrence Summers or Janet Yellen or Martin Feldstein aren't as skilled in handling deflationary scenarios. However, many are in the high inflation camp right now and if we get such a scenario, Bernanke may not be very good.

My opinion doesn't count for much but here's one to re-appointing Ben Bernanke...

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4 Response to Opinion: Ben Bernanke should be re-appointed

Shalom Hamou
August 10, 2009 at 10:12 PM

________


Read "Bernanke's Iron Fist."


<span>Abstract</span>:

I am going to show here that central banks have excessive powers which are coherent neither with democratic principles nor with morality. Their existence can not be justified from a mathematical point of view.

Worse, in light of the exercise of their extraordinary power by Bernanke, I argue that they can pose a real threat to democracy, peace, privacy and individual freedom.

Because of the immediate dangers that are evoked in these lines I strongly suggest that you reproduce my deeds.



"I will argue here that, to the contrary, there is much that the Bank of Japan, in cooperation with other government agencies, could do to help promote economic recovery in Japan.

Most of my arguments will not be new to the policy board and staff of the BOJ, which of course has discussed these questions extensively.

However, their responses, when not confused or inconsistent, have generally relied on various technical or legal objections—- objections which, I will argue, could be overcome if the will to do so existed."


Prof. Ben Shalom Bernanke
Japanese Monetary Policy: A Case of Self-Induced Paralysis?
For Presentation at the ASSA Meetings, Boston MA,
January 9th, 2000.


In my Tract: The Age of Turbulence: Plea for a New Economic Order I prove that after an unknown period of Irrational Exhuberance, which will inflate the Mother of All Asset Price Bubbles, we will have a Keynes' Liquidity Trap, The Crash and The Deep Depression.


In fluid dynamics, turbulence or turbulent flow is a fluid regime characterized by chaotic, stochastic property changes. This includes low momentum diffusion, high momentum convection, and rapid variation of pressure and velocity in space and time.

It owns most of the discontinuous and chaotic properties of a Market Crash and of a Keynes' Liquidity Trap.



There is a remote possibility that The Crash and The Deep Depression, in a pattern similar to Hitler with The Great Depression, will allow the instauration of a totalitarian regime, an Adventure in a New World Order..


"But the essential issue here is one of insurance, with a relatively modest premium, against a potentially catastrophic, very low probability event.

With that, Peter, would you outline your proposals to us?"


Chairman Alan Greenspan
Meeting of the Federal Open Market Committee.
August 24th, 1999


__________

Shalom Hamou
August 10, 2009 at 10:13 PM

First, and with all due respect, Sir, my name is not Peter. My name is Hamou, Shalom Patrick Hamou.

I propose a plausible alternative to The Deep Depression, The Adjusted Credit Free, Free Market Economy, our New Economic Order.

It is a fair, prosperous and stable economy that protects its participants from the consequences of The Deep Depression.

That economy is both liberal and libertarian.

That New Economic Order does not discriminates and guarantees the individual freedoms of its participants.

In order to reserve your option to participate you just need to register anonymously, before The Crash, the serial number of a €5 bank note in our Public Cra$h R€gi$t€r It is Free!.


By the way, I have just updated a paragraph of my Tract: Model of the Yield Curve.


The Movement for the New Economic Order Against the Adventure in a New World [Order].
http://www.youtube.com/v/-6Fpoebz2LE

MrParkerBohn
August 11, 2009 at 8:45 AM

According to this
http://www.intrade.com/
Bernanke has an 82% chance to be re-appointed.

I'm not qualified to judge Fed policy, but Bernanke certainly seems like someone with the right kind of temperment and background.

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August 13, 2009 at 9:59 AM

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