The Villain – By Roger Lowenstein
Found via ValueWalk.
THE U.S. FEDERAL RESERVE was founded 99 years ago, as a bulwark to the banking system and an antidote to its frequent runs and panics. Strictly speaking, it was America’s third attempt at a central bank. The first, organized by Congress in 1791, was allowed to expire after 20 years, leaving the young republic with only a patchwork system of weaker state banks. During the War of 1812, Congress realized its error (in the absence of a central bank, inflation had run rampant), and in 1816, it chartered a second bank, again for 20 years. The Second Bank of the United States was, in the main, a success. Its notes were circulated as currency, and it astutely managed their supply so as to keep the economy humming. Alas, President Andrew Jackson, a fierce opponent of both paper money and national banks, campaigned in 1832 against renewal of the charter, and indirectly against the bank’s brilliant but impetuous head, Nicholas Biddle. Resentment against financiers was running high, and the election became a referendum on the genteel Philadelphia banker versus the rough-hewn war hero—and a referendum on the bank itself. Jackson won, and the Second Bank was, per his promise, destroyed. The U.S. economy promptly plunged into a severe depression. Biddle died not long after, in semi-disgrace, but the battle between bankers and populists never went away.
None of the invective heaped, of late, on Ben Bernanke would have come as a surprise to Biddle, and one doubts whether the Fed would fare much better with the electorate today than the Second Bank did in the 19th century. Bernanke himself certainly would not win a popularity contest. In 2010, four years after his appointment by President George W. Bush as Fed chief, he was approved for a second term by a Senate vote of 70 to 30—the slimmest margin for a Fed chief ever. (In 2000, Alan Greenspan won a fourth term by a vote of 89 to 4.) Bernanke’s troubles with politicians were a direct result of his sagging poll numbers, and since his reappointment these numbers have only gotten worse. In a Bloomberg poll last September, only 29 percent of respondents expressed a favorable opinion of Bernanke; 35 percent had an unfavorable view. In October, just 40 percent of those surveyed by Gallup said they had confidence in Bernanke’s ideas for creating jobs; even congressional leaders inspired greater faith.
- Federal Reserve Policy Failures Are Mounting - By Lacy Hunt
Found via Zero Hedge. The Fed's capabilities to engineer changes in economic growth and inflation are asymmetric. It has been historically documented that central bank tools are well suited to fight excess demand and rampant inflation; the Fed showed...
- The Fed Chairman Is Not Always The Key Speaker At Jackson Hole - By Frank Martin
Found via Santangel’s Review. If you hung on the words of Ben Bernanke at the August 31, 2012 Jackson Hole Symposium, you may have listened to the wrong speaker – or perhaps chosen the wrong time – if you were looking for clues about whether the...
- Video: Fed's Hoenig On Monetary Policy, U.s. Economy
Aug. 25 (Bloomberg) -- Federal Reserve Bank of Kansas City President Thomas Hoenig talks with Bloomberg's Michael McKee about the Fed's ability to help the U.S. economy. Hoenig says there's a limit to how much more the central bank can do...
- Hussman Weekly Market Comment: A Blueprint For Financial Reform
The tape that plays in Ben Bernanke's head appears to be a rather short phrase "We let the banks fail during the Great Depression, and look what happened." And then the tape repeats. The difficulty is that this story line ignores the distinction between...
- Requiem For The Dollar – By James Grant
Ben S. Bernanke doesn't know how lucky he is. Tongue-lashings from Bernie Sanders, the populist senator from Vermont, are one thing. The hangman's noose is another. Section 19 of this country's founding monetary legislation, the Coinage Act...