In these pages we have been unequivocal since 2010 that Federal Reserve Chairman Benjamin Bernanke must be asked by President Barack Obama to resign.
Bernanke, as the only contentious Fed Chairman in the history of the institution since 1913, has performed poorly. He cried wolf about an imminent depression in 2007 but was late in lowering interest rates and continues to be severely intransigent in meeting the Fed mandate through industrial policy, after confiding publicly to the United States Congress that his monetary policy judgments had suffered because of his bad judgment.
After the recent summit of the major emerging markets – Brazil, Russia, India and China (BRIC) – in New Delhi, India, Brazilian President Dilma Rousseff, has complained to President Obama about US monetary policy’s constraining effects on the growth of developing countries.
Poor monetary policy making is once again coming under intense scrutiny and critique given the expected slowdown of economic growth in 2012 with unemployment continuing to hover above 8%.
Price stability is being traded off against real wages as a compensation for value and against employment certainty. Global economy is not adding value for wages to rise, which rise in a non-inflationary manner only during periods of structural change and higher potential growth rates.
Bernanke has paid no heed to the impetus a more intrusive monetary policy can provide to the pace of structural change even though President Obama made that his objective since 2009.
Bernanke and his Federal Reserve are deliberately embracing lower global growth rates due to lower investment because of fears of higher then desirable expected inflation while income disparity and poverty have been rising, including in the United States since the Great Recession of 2007.
The Federal Reserve is on vacation after putting monetary policy on autopilot through 2014 at near 0% Federal Funds Rate, with the risk of the coming slowdown turning into another recession and that into a depression because of consumption uncertainty at an unacceptably high level of broader measures of unemployment around 14.5%, rising national debt and interest payments on it, looming entitlement spending, and geopolitical risks, while the United States is stuck in a liquidity trap, even though the Fed has been well prepared for 2007 at least since 2006 and, in particular, after Japan’s prolonged and continuing experience with deflation.
We once again urge Mr. Bernanke to resign because his monetary policy is not saving the United States from the very real possibility of a depression despite his much ballyhooed efforts to prevent it since 2007.
There are ways to fix the US economy before it is too late.