Today, Ben Bernanke, Chairman of the Federal Reserve Bank, our central bank, testified before the House Financial Services Committee of Congress. I watched nearly all of the proceedings and into the question and answer period. They were finished with Chairman Bernanke by 1pm.
It is interesting to listen to the questions the members of Congress ask of the Fed chief. Some members of Congress realize that he is chairman of our central bank, while others, by their questions, would feel better if he sat before them in a Superman outfit, cape and all. Chairman Bernanke was asked questions about the US dollar, but he had to defer by saying that he was not the Secretary of the Treasury. I think, if he had a choice in time and place, he might opt to be the chairman of a central bank with a currency not under the pressure the US dollar finds itself under today. But, this is the hand he was dealt, and these are the cards he has to play. I am sure the German mark or the Swiss franc are the kind of cards any central banker in his right mind would have preferred to play. But, since that is not the case, let’s talk about the hand we were dealt.
If you have read any of my earlier pieces, you know my opinion on oil and what the price of oil is doing to our economy. You don’t have to be an Einstein to figure out that we can not pay for oil, gasoline and diesel what we have been paying and still have money left over to go shopping the way we did when gas was one dollar a gallon. Even a buck and a half a gallon looks cheap now. Chairman Bernanke is careful in choosing his words, as he should be. At least he does not talk in riddles like Mr. Greenspan. We will be very lucky if the price of gas at the pump stays where it is today for the rest of the year. I don’t think that is going to happen unless the government takes some action.
What kind of action should the government take? Well that is a good question. There are reserves that could be taped, but that is not a long term solution. What we need is a mechanism, much like the central bank, that influences the growth rate of our money supply, to influence the price of oil. I know, every conservative will want to shoot me along with the oil companies, but I think in our society, oil is the blood that carries nutrition to every facet of our economy. As I have said before, if I was given one lightening bolt from the economic gods to throw at our economy, I would throw that bolt with all my strength at the price of oil. Enough said, I think everyone now knows where I stand. And, by the way, I think the President and the cabinet could do more than they are doing with regards to bringing down the price of oil. Yesterday oil prices broke through a new intra-day high of $102 a barrel.
A few words about our Chairman Ben Bernanke. This is a good man. As they say, he has his heart in the right place, but he is no fool. One member of Congress correctly noted that he was a professor of economics at Princeton and one of the most knowledgeable men in the world on central banking. I like this guy and I encourage everyone in Congress to give him high marks. We may be in for some very tough times for our economy, so, I caution the members of Congress to realize we have the best man for the job right now. Don’t blame the messenger when the boat starts to really rock. The chairman did not get us into these waters by himself.
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2 comments:
There will be no activity in congress regarding the price of oil until it translates into lost votes and the potential to lose the next election. And Bush and the rest of the Texas oilcrats don't want to see the price of crude come down. Nor the Alaska guys, either.
Lceel,
I'm afraid you are right. At his press conference yesterday, the President wasn't even aware that there are economists predicting $4 a gallon gas by this summer. It is sad that he doesn't even the know the world the rest of us are living in. I would like to talk about something else, but I feel that I should try to bring attention to this problem. It makes you wonder what was discussed by Dick Cheney and the energy people when they had their famous closed door meeting. The current prices are literally sucking the life out of our economy. The stimulus package will only go so far and many, many people at the lower end of the food chain will use that money to pay bills and existing credit card debt. The way it looks, Washington is blind to what might be the fallout from $4 gas. I hope I am wrong, but I have been watching this stuff for a long time.
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