Thursday, May 28, 2009

Bernanke as Mad Scientist

I am really beginning to see Fed Chairman Ben Bernanke as a mad scientist who is using the economy as his personal laboratory.

In early 2008, we had money growth (M2nsa) at a 12% annualized growth rate. During the summer of '08, he slowed money growth to as low as 1.2%.

In late September of '08, he again hit the gas pedal taking money supply to 15% annualized growth. Over the last month, he has started to slow money growth, again. Three month annualized growth has fallen to 6.4%.

Given the amount of Treasury securities the Fed will have to buy, I don't expect the growth rate to stay this low, but I have never seen such whipsaw action in money growth, never. And I have pretty much looked at all money growth since the inception of the Fed.

Either Bernanke is scared as hell because he knows how much money printing he will have to do, so he slips in a breather every once and awhile, or he is truly mad, and is experimenting with the economy with various "tools" that are jerking money supply all over the place.

In either case, it is not healthy and the jerking around of the money supply will also, of course, jerk around of the economy.


  1. He ain't no mad scientist. He is working to a plan given him.

  2. I would like to nominate the following as Bernanke's theme music: