Ben Bernanke is currently fighting for Senate reconfirmation as Chairman of the Federal Reserve. Bernanke has presided over a more expansionary and intrusive Fed than our country has ever seen. His agency’s rabid expansion of the money supply will trigger price inflation over the long term, and the Fed’s current near-zero interest rate is sending capital out of the country and setting the stage for another round of bad loans. Kentucky Senator Jim Bunning provided a brilliant and pithy assessment of Bernanke’s performance. I can’t improve on it, so I’ll link to it below and encourage you to read it: http://blogs.wsj.com/economics/2009/12/03/bunning-statement-on-bernanke-you-are-the-definition-of-a-moral-hazard/
It’s worthwhile to take a step back from Bunning’s acumen and consider the role of the Fed in the first place. The Federal Reserve was established in 1913 for a number of reasons, most notably to lend stability to the U.S. banking system and control inflation. The central bank has failed in both respects. U.S. banking is experienced considerable instability under the Fed’s guidance, and we are all aware of what the current banking crisis is costing us. The dollar increased in value by 13% in all of the years prior to 1913, but has decreased by 92% since the establishment of the central bank. Simply stated, the Fed is the cause of much of the inflation and instability we experience. Any serious assessment of the Fed would consider it to be a failure, yet Bernanke and others continue to insist that it will do a better job if it gets more power and control. It’s time we end this facade.
Unfortunately, few Americans understand the damage that the Fed routinely inflicts on everyday Americans. The Fed taxes us indirectly when it expands the money supply, thereby lowering the purchasing power of the dollars we earn and save. Artificially low interest rates encourage risky borrowing, and create an environment where average people must put their money at risk to just to keep up with inflation. Today, many have turned to gold, leading Bernanke and others to suggest that the Fed should play a role in bursting what he sees as “bubbles” in gold, silver, and other commodities. This is central planning at the core, and it does not work.
Much of what the Fed does is undisclosed, but the momentum for a complete audit of the central bank is growing. HR1207, co-sponsored by Republican (libertarian) Ron Paul and Democrat Alan Grayson has passed the House and the Senate version (S604) is currently under consideration, where Jim DeMint and others are fighting for passage. Bernanke and other Keynesian economists have referred to the bill as dangerous and irresponsible. It’s high time the American people understand how an unbridled Fed is destroying prospects for long term economic growth. Ending the Fed is the ideal situation, but restricting its power is a good move in the short run. HR1207 is a definite step in the right direction.
I urge you to keep an eye on Bernanke’s confirmation hearings and the fate of S604. It’s easy to get preoccupied with the healthcare debate, but Bernanke and S604 are too important to ignore.