Bernanke Press Conference Roundup

Federal Reserve Chairman Ben Bernanke did an unprecedented press conference yesterday. As VOA reported, Bernanke thought that stock price rises were sufficient proof that his last bout of "quantitative easing" was a boon to the nation. Others have disagreed.

So, why not QEIII then, Ben?

“The trade-offs are getting — are getting less attractive at this point. Inflation has gotten higher. Inflation expectations are a bit higher. It’s not clear that we can get substantial improvements in payrolls without some additional inflation risk. And in my view, if we’re going to have success in creating a long-run, sustainable recovery with lots of job growth, we’ve got to keep inflation under control. So we’ve got to look at both of those — both parts of the mandate as we — as we choose policy.”

Why can't the Fed make my visit to the gas station more pleasant, Ben?

"There’s not much that the Federal Reserve can do about gas prices per se...After all, the Fed can’t create more oil."

It can create more money, though. But hey, in this Wizard of Oz show, please don't look at the inflationary machine behind the curtain when thinking about rising prices.

The Fed keeps buying more U.S. debt:

The Federal Reserve's balance sheet expanded to a record $2.695 trillion in the week ended April 27 from $2.690 trillion in the prior week, the central bank said on Thursday. The Fed continues to buy bonds to try to lower long-term interest rates....The report shows that the Fed's holdings of Treasurys rose to $1.413 trillion from $1.402 trillion in the previous week.

Ron Paul was not impressed:

When it comes to prices, it’s never their fault. I mean, how many different things did he mention about why prices go up, why we have inflation? He never admits it’s the inflation of the money supply that’s the problem.

When he was asked about the dollar, he said, “Well you know, the person in charge for the value of the dollar is the secretary of the Treasury.” Well, Bernanke can triple the money supply, and then he wants to duck the issue that he’s responsible.

He says, “Our position is a strong dollar” ... with constant devaluation, even while he spoke it was devaluing. Against gold, it went down 1.5%. It doesn’t make any sense.

Bill Flax at Forbes calls Bernanke an "honest politician" in the worst sense:

Bernanke assures that the Fed can seamlessly unwind its unprecedented balance sheet expansion. As proficiently as Washington depletes other’s balance sheets, it’s doubtful they can efficiently navigate such treacherous rapids. Nobody could conceivably track the almost infinite variables muddling our floating fiat monetary policy.

A notoriously corrupt member of Lincoln’s cabinet once quipped, “An honest politician is one who, when he is bought, will stay bought.” Bernanke reduced the Fed to a political appendage. To secure re-confirmation, he struck a bargain with Senate Majority Leader Harry Reid. While manning the monetary policy dials, Bernanke agreed to forgo impartiality and err on the side of accepting inflation rather than risk upsetting the recovery.

Yesterday we learned Ben Bernanke will stay bought.

The Fed will “continue expanding its holdings of securities,” i.e. it accepts inflation and will print more dollars; it will continue “reinvesting principal payments,” i.e. it plans to maintain its bloated balance sheet; and interest rates will remain at “exceptionally low levels for . . . an extended period.”

Bernanke plans three more press conferences this year.

Computer traders wondered how to quantify his blatherings to make a buck in real time.

In unrelated news, gold went up $20.20 yesterday (and another $9.20 today), and silver up $2.10 yesterday (and another .70 today).

A pre-opinion on Bernanke's performance, from China: tired of dollars.

And a "word cloud" of the speech. Appropriately, the looming specter is "inflation."

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  • Hugh Akston||

  • Otto||

    Hayek is the winner in four rounds by technical knockout.

  • Octothorpe||

    The Euro today =$1.485

  • wef||

    Libertarian toldyaso catastrophe porn. Everyday another, ha-ha!

  • ||

    preemptive shorter shrike:

    The supply of money is immune to the law of supply and demand!!!

    LALALALALALALALALALALALAL I can't hear you LALALALALALLALALALALALLALALA

  • Bucky||

    but, but, The Fed still likes our bonds...
    so, so there...

  • ||

    shrike has to do some more copy-paste from wikipedia before he can start bullshitting his way through econ threads again.

  • johnl||

    The word cloud was beautiful.

  • Rich||

    Paraphrased wrap-up: Previous policy responses were not adequate. The housing market remains weak. Many factors hold the recovery back. I understand why people are impatient. The US will return to be the best economy in the world. Thank you very much.

  • ||

    "When he was asked about the dollar, he said, “Well you know, the person in charge for the value of the dollar is the secretary of the Treasury.” Well, Bernanke can triple the money supply, and then he wants to duck the issue that he’s responsible.

    Incidentally, the U.S. dollar fell today to its lowest point since the summer of 2008.

    http://online.wsj.com/article/.....19362.html

    You guys remember the summer of 2008, right? When everything cratered?

    Anyway, Bernanke and Geithner wanting the currency weak isn't the only reason the dollar is falling.

    ...but despite what they've said over the last couple of days, a weaker dollar is what they want.

    CEOs have been thrown in jail for doing less risky things with the public's money. ...less risky than the game Bernanke and Geithner are playing with our money right now.

    I hope we're wrong and they're right, but I doubt it.

  • ||

    Bernanke thought that stock price rises were sufficient proof

    So lets see...i am sitting on a ton of cash that is losing value by the second...

    What should i do?

    Real estate is out for obvious reasons.

    Bonds are out for obvious reasons.

    Hey look over there what is this stock market thingy?

  • ||

    Dow measured in silver ounces.

    Doesn't look very boomy to me. And it's flat or down against gold and oil too, before the usual suspects accuse me of cherry-picking commodities.

  • ||

    the usual suspects

    Shrike is neither usual nor plural.

    but yeah that was my point. Recent rises in the stock market is simply inflation taking a shit.

  • A Serious Man||

    So how long till The Truth shows up and starts spouting on about the inevitable Red Dawn that is Chinese hegemony?

  • ||

    Do liberals realize that printing money is just a very regressive form of taxation? Sure it hits the rich too, but as with all forms of taxation, the rich have ways of hedging inflation (buying real assets, real estate, precious metals, TIPS, etc.). What are poor people going to do when milk costs $7/gallon, bread costs $5/loaf and gasoline is $6/gallon? I guess, "Hand out more printed money," would be the liberal response.

  • ||

    "Do liberals realize that printing money is just a very regressive form of taxation?"

    Generally speaking, I've found that self-identified liberals will usually counter those arguments with observations about gay marriage, intelligent-design in public schools and especially what Sarah Palin thinks she can see from her back yard.

    So the answer is "yes" and "no".

  • ||

    Bread and gas cost that now in Canada, though slightly cheaper in US$ (hee hee.

  • Douglas Fletcher||

    High inflation=No Obama.

  • ||

    If I didn't know better, I'd think Bernanke arranged this press conference because he wanted to make a public appearance where Ron Paul wasn't asking him tough questions.

  • ||

    It is interesting Bernanke is anxious to go before cameras and talk big about transparency, yet Fed goes to court so it doesn't have to say who has crazy lines of credit down there on Maiden Lane.

  • TheSporadical||

    "It can create more money, though. But hey, but in this Wizard of Oz show, please keep don't look at the inflationary machine behind the curtain when thinking about rising prices."

    Heads up Brian...a couple of ideas smashed into each other and failed to form a sentence...

  • ||

    I agree. I am pretty sure "don't look behind the curtain" is embedded enough in the national lexicon of metaphor that inserting "Wizard of Oz show" was entirely unnessasary.

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