Monday, September 16, 2013

Is Bernanke Looking For A New PR Director?

By, Chris Rossini

If you read Megan McArdle today in Bloomberg, you'd think she was applying for a job as Bernanke's Director of Public Relations:
I frequently pause for a moment of silence wherein I thank our lucky stars that Ben Bernanke happened to be at the helm of our central bank when the financial system threatened to come crashing down around our ears. [...]
And if you had asked yourself before the crisis who could be trusted to take those powers, you would probably have named Bernanke, an extraordinarily gifted economist and student of the Great Depression. In the face of a crisis like no one living had ever faced, he was flexible, creative and decisive.
Talk about laying it on thick...

This calls for some antidotes:

Ludwig Von Mises: “Credit expansion is the government's’ foremost tool in their struggle against the free market. In their hands it is the magic wand designed to conjure away the scarcity of capital goods, to lower the rate of interest or to abolish it altogether, to finance lavish government spending, to expropriate the capitalists, to contrive everlasting booms, and to make everybody prosperous.”

Did Bernanke do battle against a market that was ready to clear away the malinvesments, which were fostered by the Fed?....Yes he did.

Did Bernanke succeed?...If you read Megan McArdle, you'd think he did. But the market plays the long-game. It always has the last laugh against the bankers and planners.

Murray Rothbard: “What makes us rich is an abundance of goods, and what limits that abundance is a scarcity of resources: namely land, labor, and capital. Multiplying coin will not whisk these resources into being. We may feel rich for the moment, but clearly all we are doing is diluting the money supply.”

As a central banker, has Bernanke created any kind of good or service? Has he created any type of wealth whatsoever?....Of course not.

Has he multiplied coin?....Well, we're so far down the road of inflation that they don't even use coin anymore; but yes he has created a lot of electronic digits. Evidently, according to McArdle, having the ability to type all those extra 000's makes you "an extraordinarily gifted economist". Then again, it's doubtful that Bernanke himself is the one doing the typing...

Do some people feel rich as a result of those extra 000's?....Yes, there are the politically-connected few. But this "recovery" is weaker than weak. The Fed's money machine isn't creating that feeling like it used to.

You can only pile the malinvestments and government regulations so high...Eventually, even the 000's can't keep the illusion going anymore.

Murray Rotbhard: “If government wishes to see a depression ended as quickly as possible, and the economy returned to normal prosperity, what course should it adopt? The first and clearest injunction is: don’t interfere with the market’s adjustment process. The more the government intervenes to delay the market’s adjustment, the longer and more grueling the depression will be, and the more difficult will be the road to complete recovery.” 

The next battle of Central Banker vs. The Market is zooming towards us. The timeless quotes from Mises and Rothbard will be as relevant as they've always been.

On the other hand, either Bernanke or the next Fed Chairman better look into hiring someone like McArdle to weave some serious fairy tales for the public.

They're gonna need it.

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