Tuesday, December 7, 2010



Apparently, Obsequious Ben Bernanke’s hubris (See my 12/2/10 piece, AFTER PRIDE COMES THE FALL) is not limited to matters of fiscal policy. One wonders, after watching Sunday night’s edition of 60 Minutes, whether the man’s hubris knows any boundaries, in either breadth or height, at all.

What caught the markets’ attention was Mr. Bernanke’s apparently expressed belief that the markets needed more help and thus his opining that “it’s certainly possible” that his program to use manufactured out of thin air money (okay, for you purists out there, manufactured out of thin air reserves) to purchase treasury debt could be expanded beyond the parsimonious $600 billion announced last month, which itself was an expansion of a previous, and so far failed (See my 11/16/10 post, WAIT, WAIT, WAIT…YOU MEAN THAT IT GETS LIGHT OUT WHEN THE SUN RISES?), trillion dollar plus program. The markets, hanging on Mr. Bernanke’s every utterance, took this to mean that the Olympian Mr. Bernanke, in his usual Solomonic wisdom, must know something they don’t and started out Monday in a dyspeptic mood.

What unsettled me, and others who think beyond the next trade, was not a hint from the bearded Hammurabi at the Fed that things may not be as eupeptic as the markets had apparently thought. What was truly troubling was Mr. Bernanke’s contention that he has “100%” confidence that he could prevent runaway inflation… “We could raise interest rates in 15 minutes if we had to. (Sounds an awful lot like “I could quit any time I want to,” but I digress.) So there really is no problem with raising rates, tightening monetary policy, slowing the economy, reducing inflation, at the appropriate time.” Mr. Bernanke has thus proclaimed himself Monetary Superman.

Mr. Bernanke is no kid; he is approximately my vintage. With such age, I had thought, comes a dramatic reduction in the number of things in which one is 100% confident. I am down to about two. Apparently, Mr. Bernanke’s list is long and growing. Regardless of what one thinks about the merits of what has been given the cutesy-pie moniker QE2, one ought to share my alarm at the thought of a man so certain in his wisdom and efficacy having effectively been handed the economic reins of the world.

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