Ben Bernanke & The Fed: An Answer?

Yesterday, the Chairman of the Federal Reserve Bank, Ben Bernanke, spoke before the House Committee on Financial Services. Personally, I find this to be very interesting. Unfortunately, I missed it, but these are my comments.

It is my opinion, that our central bank, has as its primary responsibility to protect the integrity of the U.S. dollar. That, in my mind, is of primary importance. Let me put it in a sports analogy. The Fed, if we are talking baseball, is responsible for the integrity of the baseball. The baseball when hit by a bat should not travel as far as a golf ball, nor should it travel as little as a beach ball. For me, the integrity of the U.S. dollar is of primary importance.

Second, the Fed should see to it that there are enough reserves in the banking system to move the economy forward. However, in my opinion, it is not the Fed's responsibility to see to it that there is full employment. That is the job of Congress and the Administration, as they craft fiscal policy. Monetary policy is the wrong tool to deal with full employment. And, while Congress may think that everything they fuck up can be blamed on monetary policy, the truth is, this is not the case.

Asking the Fed to be responsible for something Congress should do is not surprising. Congress dropped the ball on regulation by deregulating the financial industry. Those idiots that think we were "now too big for little boys clothes", in their infinite wisdom decided that the country did not need financial regulation anymore because we were all grown up. Former Senator Phil Gramm is one of those idiots, and he has a PhD in Economics. I did not know you could get a PhD in Economics as a prize in a Crackerjack box. (My apologies to Crackerjack, they give decent prizes.)

The Fed is being asked to do jobs that a central bank should not have to do, but this is typical of the kind of lawmakers we have. I am at odds with the way monetary policy has evolved to be run in this country. In my opinion, it is not anywhere near being a level playing field. Monetary policy is run for the advancement of the economy at the expense of those that do not invest, but rather save their money in a bank savings account. To me, this is not a level playing field. People should not be "forced" to turn their money over to Wall Street to keep pace with inflation. Do you see where I am going?

The individual and institutional investors have little choice but to enter the capital markets and invest in fixed income securities (mortgage-backed bonds and other debt instruments) or stocks, whether common or preferred, to maintain the purchasing power of their dollars.

I am willing to go along with a little inflation for the good of the overall economy, but only if the investor and consumer protections are real, have teeth, are funded with live people to enforce the regulations, do the oversight and auditing, and then the investigation and prosecution of the bad boys that break the rules.

What we got from Congress was the dis assembly of the regulations passed in the 1930s and 1940s, an idiot savant like Alan Greenspan running the Fed, and a few presidents that did not give a shit about the ordinary citizen. And now, Congress does not think the Fed did a good job. Who is going to hold a hearing about the job Congress did to fuck it all up in the first place?

Stay Tuned.