Bernanke Gives Alan Grayson the Finger

Do you need a laugh?

Federal Reserve Chairman Ben Bernanke has responded in Dali like fashion to questions submitted to him by Congressman Alan Grayson.

Joke Answer number 2 really got me howling.

Grayson asked:

How do you plan on dealing with all of the mortgage-backed securities on the Fed'sbalance sheet? A central bank normally holds sovereign debt, so as to avoid counterparty risk; does the Federal Reserve regard mortgage-backed securities as sovereign debt?

Bernanke replied:

The Federal Reserve's holdings of mortgage-backed securities (MBS) are not equivalent to sovereign debt, but they are fully guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae and thus pose essentially no credit risk to the Federal Reserve

Got that? Fully guaranteed by the once near bankrupt Fannie, Freddie and Ginnie. Hmm, I wonder who props them up? Oh yeah, the Treasury--which is propped up by, uh, let me think on this, oh yeah, the Federal Reserve. Thus, the true reason for all these layers of government agencies becomes clear. If you get someone like Grayson who wants to get to the bottom of something. You give him the finger, by putting him on the never ending loop.

Below is Bernanke's full response to all of Grayson's questions. Warning these are thigh slappers. Do not have any drink in your hand, when reading. Here's Bernanke on the Fed's role in the housing crisis:

I don't believe that monetary policy during the early and mid-2000s was responsible for the boom and subsequent bust in the U.S. housing market.

Also check out Bob English's breakdown of Bernake's claim that the Fed hasn't intervened in the stock market: Did Bernanke just tell Congress the Fed is supporting the stock market? 

Bernanke Response to Grayson Questions 5.28.10