Bernanke Throws a Hissyfit

ilene's picture

Bernanke Throws a Hissyfit

Courtesy of Mike Whitney

ben bernanke Say what you will about Alan Greenspan, he was never a whiner. Unfortunately, the same can't be said for present Fed chairman Ben Bernanke. Bernanke's speech on Friday at a conference for the European Central Bank (ECB) was so full of crybaby blabber that attendees must have thought they'd ducked into a Frankfurt daycare center by mistake. What an embarrassment! For nearly an hour, Bernanke went on and on about how mean China is and how they manipulate their currency to gain competitive advantage. It was surreal; like listening to a serial arsonist complain about his wife smoking in bed. Here's a sample:

“Currency undervaluation by surplus countries is inhibiting needed international adjustment and creating spillover effects that would not exist if exchange rates better reflected market fundamentals,” Bernanke moaned.

Let's get this straight, when China's dollar peg was helping to recycle hundreds of billions of dollars into dodgy mortgage-backed securities and inflating a monstrous asset bubble that enriched Bernanke's crony friends on Wall Street, everything was hunky dory. But now that the Fed can't pump up another credit bubble by lowering interest rates, out come the handkerchiefs and everyone is supposed to feel sorry for poor little Bennie. Waah!

Why should China care about "market fundamentals"? China is doing what is right for China. What's wrong with that? Americans wish that their government would operate the same way and implement policies that support the interests of US workers instead of lining the pockets of multinational capitalists and bank-vermin.

Here's more from Bernanke:

"The exchange rate adjustment is incomplete, in part, because the authorities in some emerging market economies have intervened in foreign exchange markets to prevent or slow the appreciation of their currencies. ... why have officials in many emerging markets leaned against appreciation of their currencies toward levels more consistent with market fundamentals? The principal answer is that currency undervaluation on the part of some countries has been part of a long-term export-led strategy for growth and development. This strategy, which allows a country's producers to operate at a greater scale and to produce a more diverse set of products than domestic demand alone might sustain, has been viewed as promoting economic growth and, more broadly, as making an important contribution to the development of a number of countries."

That's right; China's export-led model is the root of its success, which is why it's not going to change anytime soon. And China has been helped every step of the way by congress's blanket support for labor-crushing "free trade" policies. If China has suddenly morphed into Frankenstein, Bernanke can only blame himself and the other members of the Washington political class. 

Bernanke again: "However, increasingly over time, the strategy of currency undervaluation has demonstrated important drawbacks, both for the world system and for the countries using that strategy."

In other words, it's all a matter of whose ox is getting gored. None of this mattered when homeowners were getting swindled in the biggest home equity ripoff of all time ($8 trillion in lost equity) or when Bernanke was bailing out his oily bankster buddies by handing them $1.75 trillion in reserves for their garbage mortgage paper that no one else would buy. Even in the depths of the slump when millions of unemployed workers faced the end of their benefits, and food stamp use had skyrocketed to 10% of the population, and the lines at the homeless shelters could be seen winding from sea to shining sea, Bernanke still refused to help. He still opposed a second round of fiscal stimulus aligning himself instead with the GOP deficit hawks.

But all that has changed now, because the Fed is stuck at zero-rates and isn't able to affect the smooth transfer of wealth from one class to another--from indentured US workers to fatcat speculators. China has blocked Bernanke's ability to implement policy, so the Fed chief is throwing a hissyfit. 

Bernanke again: "On its current economic trajectory the United States runs the risk of seeing millions of workers unemployed or underemployed for many years. As a society, we should find that outcome unacceptable. Monetary policy is working in support of both economic recovery and price stability, but there are limits to what can be achieved by the central bank alone. The Federal Reserve is nonpartisan and does not make recommendations regarding specific tax and spending programs. However, in general terms, a fiscal program that combines near-term measures to enhance growth with strong, confidence-inducing steps to reduce longer-term structural deficits would be an important complement to the policies of the Federal Reserve."

Hallelujah. So Bernanke finally supports a second round of fiscal stimulus. Will wonders never cease? But doesn't that mean that Bernanke was wrong from the get go? Doesn't that prove that Milton Friedman, Anna Schwartz and all the nutcase "quantity of money" people were wrong and that the "aggregate demand" Keynesians were right?*

As steward of the world's reserve currency, the Federal Reserve is not used to other countries dictating monetary policy, but that is precisely what is happening. China is in the drivers seat now. The Fed can buy up two-thirds of next years issuance of US Treasuries (which Bernanke plans to do) in order to push a wall of capital into emerging markets, but if China continues to recycle its dollars into US debt and maintain its dollar peg, then the Fed will not succeed. And, it's a good thing, too. If the last 10 years have taught us anything, it's that the unipolar world--where one country dominates politically, economically and militarily--is not good for anyone. It's time for a change. "Let a thousand flowers bloom," as Mao would say.

China has tied Bernanke's hands. The least we can do is be grateful.  

*Many seem to think that Keynes would have supported the TARP and other bailouts. I assure you, there is nothing in Keynes "General Theory" that supports bailouts for crooked bankers. People who know very little about his ideas seem all-too-eager to brand any policy they don't care for as "Keynesian". 

Originally published at CounterPunch, Tying Bernanke's Hands

Photo by Jr. Deputy Accountant  

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knukles's picture

When I'm not busy manipulating my currency lower and lying about it, I'll apply the rest of my time to bitching about you manipulating your currency.  'Nana nana na nah.  You guys are such evil people fucking up the whole world balance of trade and shit. 
Maybe if you don't behave, I'll uh....  I'll uh, lemme see.  Ah heh hummmmph.  I'll just ummm ah, well, I'll ah, ummmm...

I'll just go home and refold my underware drawer.... or, sort our my screw and nut box. 

I'll get you.


(Critical Analysis;  For the life of me, I can't make anything else out of the Bernank's speech.  Honest.  Injun.  Ben.  Like ah, Mission Accomplished?)

8pence's picture

I ran across this quote from a noted Harvard economist. We all need to understand this. All the news is on about Global economic integration. Why? to outsource our jobs? 

This is the quote. "democracy, national sovereignty and global economic integration are mutually incompatible" It's possible to have any 2 but not all 3. "It's the inescapable trilemma of the world economy"

Now consider that. Is Bubble whining because other countries won't play along with the goal of global economic integration? Why would they? Look the choices. Personally I'd take national sovereignty and democracy over global economic integration. It just isn't worth it to "we the people" to sacrifice our freedoms and individual sovereignty for. What is so hard to understand about this? The common people don't get that the rich much get richer and larger? Get over it Bubble Ben, you're a crook and psycho that drank too much from the well of illusory omnipotence and now you're crying about the hangover. I sincerely hope that when Dr Ron Paul heads up the Fed oversight committee soon, he hands you your ass on a platter. We need to get rid of the Fed and  end the interest payments we owe them - that are growing exponentally. Ben spends - national debt interest keeps growing to where all our labors will be paying only the interest owed in the near future. 


DisparityFlux's picture

Ever play a game of monopoly where the bank runs out of cash?  From the official rules:

If the Bank runs out of money, the Banker may issue as much as needed by writing on any ordinary paper.

Ben knows the rules.

wisefool's picture

*Many seem to think that Keynes would have supported the TARP and other bailouts. I assure you, there is nothing in Keynes "General Theory" that supports bailouts for crooked bankers. People who know very little about his ideas seem all-too-eager to brand any policy they don't care for as "Keynesian".

I hate to trivialize the plight we are in now with references to computer game mechanics. But I agree with the quote above.

In Sid Meier's Civilization series Lord Keynesian appears as a great person. If you horde money. The advisors start telling you you should figure out a way to spend it or reduce the revenue stream. You can run deficits from year to year. But when your savings are gone, you have to decommission units, sell buildings and/or suffer great unhappiness from the people. Which I think is truer to Keynesian's ideas.

Jupiter's picture



Regarding whether Keynsians or Monetarists were right, I think it's clear that neither faction has gotten it correct.

Increasing aggregate demand is merely borrowing from the future.

Increasing the quantity of money is merely diminishing the value of savings.


Neither of these are a free-market approach to dealing with the crisis.  If we simply had let the monkeys go down, we would be much better off.

Instead, we have these bastards who came to Washington with their hat in their hands getting paid $$$$$$$$$$ record bonuses during the same years

that the rest of the economy went south.


The biggest threat to U.S. national security is not al-Qaeda, it's Wall Street.




doolittlegeorge's picture

i agree with this. "Exposure of all ideological bs is just that--bs."  They don't take into account facts and more importantly "absurdities" and with it the commensurate "suspension of disbelief" which our hapless media "abets."  (I do give kudos to Bloomberg, tho.  "No more puff pieces" seems to be their programming mantra now.)  More to the point "blaming Wall Street alone" is simplistic.  "You need a driver of the getaway car" and "of course that's DC."  They've "put the imprimatur of legality" to "it."  To be blunt "be loyal to your state now" (NY, NJ, FL, CA, TX, RI, etc,) or "you're phucked."  If this "what looks like a duck and acts like a duck" to me "starts quackin'" via a plunging dollar and soaring interest rates (which I think can happen any day now) this disintermediation will be dramatic and VERY real.  Warren Buffet called them "financial weapons of mass destruction."  Needless to say "they can move into the realm of real weapons very quickly."  Invest accordingly...I know you've had a good year by me financially.   When I called the GM IPO "laughably underpriced" at trying to raise 5 billion..."suddenly it became over 30 billion with ease."  As was said afterward according to your "evil Wall Street"--"it's more art than science."  Indeed it is...indeed it is.  Amazingly given my "war any day now trade" I can see GM at 50 billion no problem.

Everybodys All American's picture

If Bernanke were in any other business he would be laughed out of the room.

dumpster's picture

dont need a room to shovel manure ,


but i quess the horses would get a good laugh

Nevermind's picture

As long as China buys enough US debt (at low rates), they're good. If they stop,

then they're evil. Right? Their problem is also employment, ergo they need US to buy

their goods. Jeff Saut says, "buy what China buys, sell what they sell." Good enough for me.

Dollar Bill Hiccup's picture

Misses the point, IMHO, completely.

1) Chinese will revalue / depeg or receive the gift that keeps on giving, debilitating inflation. And pitchforks, CCP.

2) The old way, the "Asian Growth" model, is finished. China is simply too large and the US is choked to the gills with overconsumption. The US cannot accept any more production overcapacity.

3) The Chinese economy needs balance and the Chinese people should benefit from their own labor, entailing greater economic and political power and freedoms. Growth at any price is hitting the wall. They took advantage of the situation and did very well building out infrastructure and jobs. Let's hope they can now transition with equal aplomb. 

4) The FED is the only one w/ the cajones and the legal standing to carry this out presently. Dual mandate, bitchez. (tip o the hat to Trav).

5) If congress sits by with its thumb up its proverbial ---, then there will really be problems going forward. The US needs a comprehensive energy policy, jobs policy, de-leveraging policy, de-consumption policy etc. Time for re-tooling. This is up to the Administration and Congress, not the FED. 

6) Wouldn't it be ironic if the Bernank is the one who sets off our own sort of "cultural revolution" ... from whence the US emerges in the end healthier, wealthier and wiser. Tighten the belt and hit the road Rocky. You're in training again.

Harbourcity's picture

Bernanke is feeling the heat and isn't use to people questioning his decisions...

f16hoser's picture

Bernanke is a banker. He does not have mainstreet in his best interests. He does and will only take care of his banker buddies and the politicians who "Play Ball" with the FED. How else can politicians get (re)elected and pay for their pork? FUCK HIM and his sponsored politicians!


Rant over. I feel better.

max2205's picture

Say no to zero interests rates, say yes to zero taxes

More Critical Thinking Wanted's picture

[...] say yes to zero taxes

So you want to pay for all road usage yourself and you want to (pre-) finance all future road building projects?


Also note that economics of scale dictate that the building of roads is only profitable in places where there's a large enough concentration of (wealthy enough) humans. Those people living in rural or expensive to build in areas are well, out of luck and should hike home or should relocate to a city. Is that your suggestion?

If you want to found a country implementing those principles you'd be in good company with some other existing examples: Somalia comes to mind. (You might want to join them in their grand experiment of zero government and zero taxes.)

Conrad Murray's picture

So you want to pay for all road usage yourself and you want to (pre-) finance all future road building projects?

Precisely how it's done now, except no party has a say in the involuntary transaction(extortion).


Those people living in rural or expensive to build in areas are well, out of luck and should hike home or should relocate to a city. Is that your suggestion?

Yes. And it's far better than your extortion racket.


If you want to found a country implementing those principles you'd be in good company with some other existing examples: Somalia comes to mind. (You might want to join them in their grand experiment of zero government and zero taxes.)

Limited government and federalism: You'd do well to understand that is what America was founded on.  Perhaps the New York Times will fund a trip abroad for you to study these subjects in the U.S.S.R., a shining example of your idyllic nation.  Lord knows nobody here would miss the puke you splatter out and call columns, in the meantime.

More Critical Thinking Wanted's picture


Those people living in rural or expensive to build in areas are well, out of luck and should hike home or should relocate to a city. Is that your suggestion?


Yes. And it's far better than your extortion racket.

Thanks for your clear (and rather cruel) answer.

There's historic examples of your 'efficient rural infrastructure' policy in action: your basic sentiment was shared by many communist dictators - Stalin and Ceaucescu are two well-known examples. Ceaucescu started a government program in the 1980s to accelerate this effect, which program force-migrated the population of hundreds of small villages to larger cities and buldozed the villages, in the interest of better communistic economy of scale:

(documentary of destroyed villages. Check the film at 1:00 to see bulldozed villages.)

Your approach of letting this process occur more naturally (more 'freely', right?) is in fact even more cruel than forced migration: you'd first let their roads deteriorate, then you'd let them starve economically and you'd let them become impoverished within a few decades - at which point most of the young and healthy will have migrated away, while the old or the ill (or the stubborn patriots) stayed behind, with no prospects and with a rotting infrastructure.

There are certainly areas of economic activities that governments (and other large, nation-state level insurers of last resort) should keep out of - but road construction is not one of those.

Thank God there's 200+ million other people in the US who do not share your extreme views, and who have a bigger say in what road construction policy gets implemented and what not.

You seem to have an emotional stance against governments, so let me explain its economic impact in 'free trade' terms: think of the US Government as a really big insurer to which company you get exactly one voting share by birthright. That share can be used to vote, and can be used to get benefits. (One such benefit is your right to make money in the US: there's 5 billion other people on the planet who do not have that right.) The only fundamental difference to owning shares in any other large company is that that voting share is lost if you forfeit your US citizenship, and that this voting share can not be sold.

razorthin's picture

Seems somone should move on to  This is definitely not your venue.  Our streets should be paved with gold.  Your economies of fraud theory is proving to the the cruelest lie of all.

kaiserhoff's picture

I must respectfully disagree.  The parasite troll should move on to North Korea.  Dear Leader will re-educate his sorry ass.

Howard_Beale's picture

I respectfully disagree. All opinions are allowed at ZH, whether you agree with them or not. You can reply and have discourse or even get nasty--not a problem. ZH, Huffington Post, MoveOn's ideology, and Fox News, are not mutually exclusive. Much of what is posted here crosses all of those platforms for dissemination or thought.

As for you, Razorthin--all 9 weeks of your stay here does not qualify you to tell someone they belong somewhere else. In fact, in my 15 months here, I have never told anyone they needed to move to another blog. Who made you the decider? I guess that would be you.

This blog used to be about agreeing to disagree on some things. Now it's a little junker game. I actually thought the post was well written and that Ben Throwing a Hissyfit was an accurate description of his speech. So what if I don't agree with all of the analysis--it was a different take on it.

Oh, and by the way, as far as infrastructure goes, I guess we don't need stoplights either if we don't need roads. Have fun with that in utopia.

More Critical Thinking Wanted's picture

Nice to see you guys apply democratic principles such as censorship or deportation when you are faced with questions you are apparently unable to answer :-)

How about the old-fashioned method of answering my points in substance? I did not make particularly difficult to understand or vague arguments, and I'll concede a point when I'm proven wrong. (It happens.)

masterinchancery's picture

Yes, a look at the history books would disclose that America prior to 1913 and the onset of the Fed and the Wilson dictatorship, prospered with economic growth rates far above what has subsequently been seen under Big Govt, Inc.

And from a purely economic standpoint, having A pay for B's expensive projects simply causes a continual expansion in such wasteful projects, which is exactly what has happened.

More Critical Thinking Wanted's picture

Yes, a look at the history books would disclose that America prior to 1913 and the onset of the Fed and the Wilson dictatorship, prospered with economic growth rates far above what has subsequently been seen under Big Govt, Inc. [...]

LOL - talk about rewriting history. I guess you read that in US history books, right?

FYI, if you read history books written in other countries as well (it helps to cross-check facts) you'll see that up to the 1910s the USA was considered a third world country economically, fresh out of a crippling civil war.

Countries like Austria, France, Germany or even the UK were considered much more advanced economically, and they produced much of the innovation and economic growth of those golden years.

The USA became a superpower after the first and second world wars - not the least helped by the explosive growth that resulted out of government (war) spending. Do you think private enterprises would have invented the atomic bomb, with a price tag of a hundred billion 2010 US dollars? Really?

If the US Government had not funded the development of nuclear weapons, what do you think the soviets would have done with the US, with their atomic weapons in hand (which was only a matter of time to develop for them - they did have big government spending) while the US only had 'free trade' and not a single company big enough to fund such research?

In such an alternate world you'd be writing these posts on a soviet computer terminal I suspect. (Assuming they'd be building computer networks into the large nuclear wasteland formerly called the U.S.A. - radition is as deadly to electronic equipment as it is to biological lifeforms.)

More Critical Thinking Wanted's picture

Here's some supporting hard data:

Western Europe GDP change from 1913 to 2003 : 902 billion -> 7857 billion (in 2009 US dollars)

USA GDP change from 1913 to 2003: 517 billion to 8430 billion.

Indeed the USA was such a big loser in the 1913-2003 period, all that senseless big government spending has really hurt its global position :-)

And the biggest loser of all, the one that has the biggest government and the highest level of government control: China. It grew from 244 billion in 1950 to 6187 billion in 2003 and 9050 billion in 2009 - what a stellar example of how bad it can be to your economy to have big government spending! :-)

More Critical Thinking Wanted's picture
Bernanke Throws a Hissyfit

Heh, he was exceedingly calm compared to the average ZH article.

Let me ask you guys a simple question: you are in a hissy fit over QE2, which aims to reduce the federal funds rate to about -2%. Since when is it a mortal sin for central bankers to do the only thing they can do: to increase or decrease the monetary base by lowering (or raising) the interest rate?

Or do you think that the US economy has 'overheated' and a rate hike is due?

I mean, this is one of the few areas conservative economists and realistic economists agree: central bankers are supposed to raise or lower rates.

You cannot have it both ways really.

Inquiring minds want to know.

Milestones's picture

Mr. T., I addressed this issue a couple of times "The Trials and Tribulations of the Federal Reserve Act of 1913" on 6-15-10 and a couple of times later. In fine, let me answer you in brief.

My argument lies in Article 1, Section 8 (5)-Powers of Congress. The Congress SHALL have power: to coin money, REGULATE THE VALUE THEREOF,--". That power was apparently DELEGATED to the Federal Reserve Bank. That DELEGATION of authority to the Federal Reserve is my question. Did Congress have the authority to delegate that authority to "regulate the value thereof"?

Panama Refining Co. v Ryan 293 U.S. 388 1935

"The Constitution provides 'that all legislative powers herein GRANTED SHALL be vested in the Congress of the United States, which shall consist Senate and House of Representatives.'--The Congress MANIFESTLY IS NOT PERMITTED to abdicate or to TRANSFER TO OTHERS the essential legislative functions with which it is vested.---Cannot be allowed  to obscure the limitations of the authority to delegate, if our constitutional system is to be maintained."

Field v Clark 143 U.S. 649 1892

--"The legislative power must REMAIN in the organ where it is lodged by that instrument."

Sovereignty is granted to "We the People" in the first 3 words of the Preamble. As such, under the Constitution, we the people delegate our Sovereign authority to persons to REPRESENT us in day to day dealings. But it is the reserve of the Soverigns to delegate authority not our reperesentatives. John Locke came to the same conclusion.

I would contend that the Federal Reserve Act of 1913 is illegal under the Constitution. Further, if we consider Marbury v Madison of 1803, a decision has has stood for over 200 years, the case can be stated in far starker terms:

Marbury v Madison 17 Wall 205 Cranch 2 1803

"Thus the particular phraseology of the Constitution of the United States confirms and strengthens the principal, supposedly to be essential to all written constitutions, that a law repugnant to the constitution is VOID; and the courts AS WELL AS ALL OTHER DEPARTMENTS ARE BOUND BY THAT INSTRUMENT."

Not only did Congress not have the authority to submit such a document as the Federal Reserve Act of 1913; likewise President Wilson had no authority to sign it. See the last sentence of the above.

Yes, I know, the Constitution has been turned into a roll of toilet paper to the 1%ers but that is still the document I still march to as do most others . If that not be the case then we would be far better served now to be comparing an AR-15 to an AK-47.

If those unhappy with the way things are want a change, we must state our concerns and grievances in a fashion that those who are totally uninformed can have a place, a handle so that a nightmare of a 2nd revolution can be avoided. 

There was a ton of groundwork done before Jefferson wrote his magnificent document of 1776. Milestones

J Robert Burgoyne's picture

Sir, it is a mortal sin that Grandma and Grandpa, and everyone else who played by the rules, earns no interest on their savings in the bank, and that said foregone interest is essentially being given to the banking cartel. 

More Critical Thinking Wanted's picture

I agree. It is anticompetitive beyond measure that in the US there's no interest on chequing accounts - and that the banking lobby has even managed to legislate this ... It's legalized theft by a thousand small cuts.

That does not change the question at hand though - is a central banker allowed to lower interest rates, if he considers the US economy too weak? Because that's what Bernanke has done with QE2 in effect.

Or, if you think the US economy is too heated, are you arguing for a rate hike?

Or do you reject both monetarist and keynesian economics (thus rejecting like 99% of all economics) and opt for a model that has no central bank?

masterinchancery's picture

No, the Fed was not established to monkey with rates, but rather to stabilize the dollar.  In fact, open market operations were illegal (despite the Fed's secret use of them in the 1920s) until the 1930s.  Instead, the Fed's erratic rate policies, aimed at pleasing our hyperspending govt, have caused a 98% decrease in the dollar's value.

MagicHandPuppet's picture

I'll opt for no central bank at all and let you keep your question within the communist community where it belongs.

More Critical Thinking Wanted's picture

I'll opt for no central bank at all [...]

I suspect this means that you prefer countries that do not have a central bank and which have no government to begin with - such as Somalia? If you want to take part in their grand experiment of a 'free' society I'm sure they welcome wealthy foreign emigrants, especially from the US.

Conrad Murray's picture

I mean, this is one of the few areas conservative economists and realistic economists agree: central bankers are supposed to raise or lower rates

This presupposes a cartel of private banks, or any institution for that matter, should have control over the nation's currency/legal tender. Take your communistic plank and build your bridge to nowhere in some other community Mr. Krugman.

More Critical Thinking Wanted's picture

Non sequitur in extremis. Could I get a clear answer from you of whether you oppose the concept of central banks lowering (and increasing) interest rates or not?

(I'm wondering, did you really reply to the right post? If yes, did you post in the right universe?)

Hansel's picture

He did answer your post.  You just didn't get it.  You want to argue about a small facet of a fucked up system.  Why are you ignoring the fucked up system?

Directly to your post, thinking the Fed is adjusting interest rates is just one perspective.  What the Fed is really doing is manipulating the money supply of dollars available.  Creating new money is not a manipulation of interest rates unless you want to think in a narrow mindset.

More importantly, the Fed's manipulation of the money supply is fundamental to bailing out banks who profited by fraud.  The manipulation is an attempt to prop up a disfunctional system, and completely unrelated to the manipulation of interest rates or the "recovery".

More Critical Thinking Wanted's picture


Directly to your post, thinking the Fed is adjusting interest rates is just one perspective.  What the Fed is really doing is manipulating the money supply of dollars available.

And guess what a decrease of the federal funds rate effects as well? Yes, an increased monetary base, and increased money supply of dollars. Reducing the federal funds rate almost directly creates new money - it did so ever since 1933 when the gold standard was abolished and the Fed started easing and 'printing money' by reducing the federal funds rate or performing open market intervention.

QE2 does essentially the same as a federal funds rate reduction: it increases the monetary base, it prints money.

So you can throw a hissy fit about QE2 only if you are throwing a hissy fit about every single reduction in the federal funds rate done by all Fed presidents of the last ~80 years. This is so obvious - but apparently it needs extra pointing out here on ZH.