In the immortal words of officer John McClane, played by Bruce Willis in Die Hard, all I can say to Federal Reserve chairman Ben Bernanke is “Welcome to the party, Pal.” Bernanke is now warning legislators about the fiscal cliff over which Washington is shoving the United States. I must say that I have a few problems with this primarily because Bernanke has been leading us over a monetary cliff all his own. At the same time, I have a few other pointed question for Chairman Ben as he chides Congress on its lack of budgetary restraint. Why, at this late date, when we’ve all known this has been coming, is it only now that the Federal Reserve Chairman feels the need to show concern?
He certainly didn’t say any of this, or not loudly, when Nancy Pelosi was running the House. I also notice that he didn’t chide the President, who hasn’t taken any substantive steps to curtail the problem, and could be said to have arguably multiplied them with his stimulus bill(a.k.a. Porkulus) that unlike previous stimulus programs, wasn’t a single budget year project, but has been copied in each successive year. Bernanke can complain to Congress all he wants, but when this whole mess got started, he was nowhere in sight. For the first three years of Obama’s administration, he said nothing much to the executive branch on the matter, at least not publicly, and he said nothing of the sort to Nancy Pelosi and Harry Reid when they controlled Congress in one-party dictatorial fashion.
Worse than that, however, he has administered the greatest printing of money in Federal Reserve history, and it has all been largely inflationary as I have reported. Mr. “Fiscal Cliff” should have thought about all of this as he was digitizing more currency into existence, through QE1 and QE2, and more recently, a quiet QE3(by another name.) All of this quantitative easing really amounts to is printing more money, (or digitizing it.) That policy leads to the same cliff, because it is by his printing of it that it exists for the government to borrow and spend in the first place.
For Bernanke to come along now, conveniently after the House is in Republican control and to then waggle his finger is a bit of a sideshow act. Some will take him seriously, and the markets may react badly, but the truth is that he has been leading us into an even greater danger, and I think he knows it. This may be his way of making a preemptive strike for later this year, if the dollar crashes. He can point at Congress and claim: “See, I told you so.” The problem is that if tries that, I will be right here waggling a finger at him, to assure him that others, like Sarah Palin, have told him so. I have made this clear repeatedly, and yet Bernanke now comes along to warn Congress? Congress? He had better heed some warnings over at the Federal Reserve himself.
Don’t get me wrong: Congress is being as irresponsible as ever, but some in the majority party are at least trying to do something about it. For Ben Bernanke to come along and say this now suggests that he’s either seeking political favor with President Obama, who re-nominated him for his current second term, that ends in Janurary 2014, or he’s setting us up because he knows something bad is coming, and he now wants to disassociate himself from any blame. It may well be both. The sharp fall in gold prices on Wednesday may signal the beginning of a deflationary cycle. That could lead to a complete economic collapse, and Bernanke’s actions over the past four years have done nothing to remove the possibility. He can point a finger at Congress if he likes, but that means there are at least three pointing back at him.