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The Case for Ben Bernanke as Mad Scientist

• EconomicPolicyJournal.com
 
Then he proves he is insane: Monetary policy remains very accommodative... Totally mad. This statement alone should get him committed. Please understand what is going on here. The Fed chairman is saying that the Fed has been "very accommodative". This when the numbers put out by the Fed indicate no such thing. Take a look for yourself, until recent weeks, Fed growth has been extremely low. The M2 money supply measure over the last year has only grown 2%. Why would you implement such a new tool that is playing some role in attracting a trillion dollars, when to do something about it might do "permanent damage" to one of the fundamental tools of monetary policy, tested and used for decades, the Fed funds rate? Mad. Here's Bernanke on when he might use these tools: Each of the tools that the FOMC has available to provide further policy accommodation--including longer-term securities asset purchases, changes in communication, and reducing the IOER rate--has benefits and drawbacks, which must be appropriately balanced. Under what conditions would the FOMC make further use of these or related policy tools? At this juncture, the Committee has not agreed on specific criteria or triggers for further action... It should be noted that the three basics were never seen in a "benefits and drawbacks" manner. This is really all about the new "tools", which really brings to the forefront and, the question: Why are all these new tools being developed and implemented, to varying degrees, in the middle of a financial crisis? Mad. In conclusion, one has to ask: Is implementing all these new 'tools' in the middle of a financial and economic crises the work of a sane man, when former Fed chairmen managed control of the money supply with proven tools for decades? Is Bernanke a mad scientist using the United States economy as his laboratory to experiment with new "tools"? While Bernanke stargazes and watches a horse whisperer perform, it is probably time for the rest of America to focus on the speech he just gave in Jackson Hole and realize that this is not the work of a man that can be classified as anything other than a mad scientist.

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