Paul Farrell: "Fed Dictator Bernanke Needs To Be Toppled"

Tyler Durden's picture

This must read Paul Farrell piece has to be recreated in its entirety.

Via MarketWatch

Fed Dictator Bernanke Needs To Be Toppled

Fed boss Ben Bernanke is the most dangerous human on
earth, far more dangerous than Hosni Mubarak, Egypt’s 30-year dictator,
ever was. Bernanke rules a monetary dictatorship that will trigger the
coming third meltdown of the 21st century.

But this reign of economic terror will end.

Just as Mubarak was blind to the economic needs of the masses and
democratic reforms, Bernanke is blind to the easy-money legacy that’s
set the stage for revolution, turning the rich into super rich while the
middle class stagnates and peanuts trickle down to the poor.

Warning, Egypt also had a huge wealth gap before its revolution.
Bernanke is the final egomaniac in America’s bubbling 30-year wealth
gap, where the top 1% went from owning 9% of America’s wealth to owning
23% during this dictatorship.

Bernanke’s ruling ideology is the culmination of a 30-year economic war
that has forged together Reaganomics for the super rich, former Fed
chairman Alan Greenspan’s toxic allegiance to Wall Street, the extreme
Ayn Rand’s capitalist dogma, culminating in the toxic bailouts of
Treasury Secretaries Hank Paulson and Tim Geithner, two Wall Street
Trojan Horses corrupting government from within.

Since 1981 this monetary dictatorship has caused enormous collateral
damage, systematically sabotaging democracy, capitalism and the American
dream while fueling the rise of our most dangerous new enemy, China.
See “Secret China war plan: trillions in U.S. debt.”

When Obama reappointed Bernanke a couple years ago, “Black Swan’s”
Nicholas Taleb was “stunned.” Bernanke “doesn’t even know that he
doesn’t understand how things work,” that Bernanke’s economic methods
are so inadequate they make “homeopath and alternative healers look
empirical and scientific.”

We called Bernanke, the “Captain of the Titanic,” warning that he was
setting up the third meltdown of the 21st century, predicted by
“Irrational Exuberance’s” Robert Shiller, a coming crash worse than the
2000 dot-com crash and the subprime credit meltdown of 2008 combined.
See “Capt. Bernanke sinks the U.S.S. Titanic.”

Inside the Fed: Cassandras, Chicken Littles, governors crying wolf

Unfortunately, as with Egypt’s dictator, the 30-year dictatorship now
headed by Bernanke must end soon: And this class war will not be pretty.
But it is no black swan; no one can claim they didn’t see a new crash

For several years before the 2008 meltdown we reported on money
managers, economists and financial gurus warning of a coming meltdown.
They included two Fed governors who warned Greenspan in the early Bush
years. And yet, as late as summer 2008 Bernanke, Paulson and Greenspan
were systematically dismissing mounting evidence of a mega crash dead

That’s why Time magazine’s cover story about Thomas Hoenig, president of
the Federal Reserve Bank of Kansas City, grabbed me. David Von Drehle’s
“The Man Who Said No to Easy Money” is a warning to all America.

Like Ed Gramlich and William Poole, the two Fed Governors who warned
Greenspan during the Bush years, Hoenig regularly dissented from
Bernanke’s easy-money policies that have been favored by Wall Street
throughout this 30-year dictatorship.

We’re paraphrasing Drehle’s interview with Hoenig as 10 warnings because
it brilliantly reveals the broader historical tragedy of the Fed’s
30-year monetary dictatorship driving America to the edge of another
1930s economic revolution, one that will be triggered by a repeat of the
1929 wake-up call.

1. Commodity price inflation will soon end the Fed dictatorship

Hoenig consistently “cast his lonely ballot against the indefinite reign
of easy money. Eight meetings, eight no votes … an unyielding point of
view, one that has become ever more relevant now that rising commodity
prices have put inflation worries back on the economic radar screen.”

In short, global commodity inflation may soon do what Hoenig could not,
put an end to America’s self-destructive easy money reign of economic
terror, and more importantly finally end the Fed’s 30-year “monetary

2. Central bank dictatorship destroying America’s democracy

Hoenig was America’s lone voice against the Bernanke monetary
dictatorship, says Drehle: “For all the headlines over the past
quarter-century about the death of American manufacturing and the
twilight of community banks and the vanishing farmer, those humble
building blocks of a sound economy still figure significantly in
Hoenig’s perspective. The way to strengthen them … is not by pumping
money into a financial system that encourages megabanks to engage in
high-risk speculation. You build them up by encouraging savings, which
form capital for investment, which builds stronger businesses, which
hire workers and pay dividends, which leads to more savings and more

3. Near-zero rates, banks richer, masses poorer, meltdown

Honenig’s opposition to Bernanke dictatorship is also clear, says
Drehle: “By keeping interest rates near zero indefinitely, the Fed is
asking savers to continue to subsidize borrowers. What incentive is
there to save and invest?”

Earlier in his long career, Hoenig was heartsick as an “irrationally
exuberant Alan Greenspan kept piling so much money onto the economic
bonfire that led to the Great Recession” in 2008. Now the “time’s come
to start sobering up.” Except Wall Street’s addicted to easy money,
won’t sober up.

4. Easy money blowing new speculation bubble … pops soon

“This is how bubbles are formed,” warns Hoenig, whose long career as
president of the Kansas City Federal Reserve Bank made him leery of the
power buildup by the central banks monetary dictatorship. So again,
“rocketing land and energy prices are telltale signs … too much money
sloshing around. When you put this much liquidity into the system, it
has to go somewhere.”

But with the Fed keeping interest rates near zero, easy money won’t go
into savings. Instead, “money starts chasing assets with higher yields —
like land, the once again booming stock market and energy” and “as more
money joins the chase, asset prices rise and keep rising until … pop,” a
new meltdown.

5. Bernanke’s narcissistic illusion of monetary power

The Fed has too much power: Hoenig “watched uncomfortably as the central
bank began playing a larger and larger role in the public’s perception
of the economy. Monetary policy came to be seen as the solution to more
and more economic issues. It has been used to deal with one crisis after
another,” stock .market crashes, recessions, the tech bubble, after the
9/11 attacks, during the Iraq war, then the 2008 meltdown.

Hoenig warns against the Fed’s power: “People came to feel that all you
had to do was ease interest rates and everything would be fine. But
that’s what gives us these bubbles.”

6. Easy money fueling worldwide inflation, and a new meltdown

Yes, Hoenig’s an inflation hawk: “The sequence of events that led to
runaway inflation in 1979 got started back in the mid-1960s. That’s …
long term.” Drehle captures the shift in Hoenig’s position: At first
backing “the Fed’s dramatic actions in 2008 and 2009 to pour trillions
into the staggering financial system.”

But now it is time to stop. As easy money chases higher returns across
the world, in places like Brazil and China, Hoenig warns that “inflation
is rising sharply. Global food prices have risen 25% in the past year,
according to the U.N., and many nations are starting to hoard

7. Fed policies favor the rich, sabotaging American Dream

In favoring Wall Street bankers, Bernanke’s monetary dictatorship is
clearly feeding the conditions that, as happened in Egypt, will ignite a
class war in America: “The poorest 60% of American households spend 12%
of their income on energy alone, compared with the 3% spent by the
richest 10% … Inflation is so unfair … it is the most regressive tax you
can impose on the public … eroding the buying power of the poor and
people on fixed incomes. The people who have money and are savvy come
out ahead. In fact, they end up stronger than before.”

8. Unfortunately, the Fed learned nothing from the 2008 crisis

A lot more than the Fed’s toxic alliance with Wall Street bothers
Hoenig: America “learned little from the crisis … government policy
continues to smile on Wall Street but not on Main Street. Instead of
breaking up the financial giants whose gambles crashed the economy, the
government has let the biggest banks grow even bigger. Now they’re
gorging on free money.”

9. Market economy? A joke, big-money lobbyists run America

Remember folks, 20 years ago in the S&L bank crisis 3,800 bankers
were jailed. This time? Wall Street robbed us, got away with it, are
still robbing us. Hoenig asks: “Where’s the penalty for failure? … We
don’t have a market economy.” American capitalism is now “crony
capitalism … who you know, how big your political donation is.”

10. America must end easy money, add new Glass-Steagall

What would Hoenig do as Fed chairman? “High savings rates, low leverage
and a strong currency.” Finally, Drehle says Hoenig would bring back the
Depression-era Glass-Steagall rule that barred commercial banks from
taking excessive risks. He would reduce government debt and promote a
manufacturing revival, but it won’t be easy, there is no painless

Unfortunately, none of this will happen until America gets hit over the
head by brutal wake-up call, like 1929 and the Great Depression 2. Until
then, the 30-year monetary dictatorship now headed by Bernanke will
keep pushing its self-destructive easy-money policies, ignoring the
warnings of Thomas Hoenig and all of the other Cassandras, Chicken
Littles and Americans Crying Wolf, over and over again.

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SheepDog-One's picture

OFF with The Bernank's HEAD!!

Fish Gone Bad's picture

Bernanke is in his office reading this right now.  Unfortunately though, he thinks everyone here is talking about a different Bernanke.

Cindy_Dies_In_The_End's picture

The irony is that Ben is fond of contributing to all of these economic and economic history books and will one day end up being described as one of the men involved in destroying the dollar.


Way to leave a legacy, Ben!


And THAT is what probably deeply disturbs him. Kinda sucks when you know history will ultimately cast you as the villain.


As usual theory, models and reality are different..where it Counts!

SheepDog-One's picture

Yes, in the future they'll read about 'the Bernanke' in this revised textbook around the village bonfire...

william the bastard's picture

They won't be reading, they'll be passing down verbal legendsfrom one generation to the next as the tale gains spice and proportion revealing the protagonist's character flaws in all it's fiery gore as a sheeple public were led to slaughter fools that they were.

flacon's picture

Not really fair to the author of this piece to lump Ayn Rand in with bailouts. Ayn Rand was vehemently against the merger of public and private enterprise. She would say: "Let the banks fail!"

Crime of the Century's picture

He also noted that Shiller wrote Irrational Exuberance, but somehow missed the fact that his Animal Spirits was mercilessly dog-eared and passed about the current Administration...

gaoptimize's picture

And more importantly, she was an advocate of sound money / the gold standard.  The falling out of Alan Greenspan with Ayn Rand and her ideas is one of the greatest tragedies of the 20th century.  Familiarize yourself with the work of Judy Shelton.

forexskin's picture

if greenspan hadn't fallen out with rand, we'd be saying 'who's alan greenspan?' right now. only players get to hold the levers

sushi's picture

as one of the men involved in destroying the dollar.



As the man who destroyed the United States.

His impact is worse than all the taliban, worse than bin-ladin, worse than any other "threat" believed to be facing the US and her people.

Alienated Serf's picture

ZH has been blocked in all Federal Reserve Offices.  If you don't see it, it doesn't exist.  Like in Iran.

Technichel's picture

Bernank just thinks he is above everyone else. He thinks he is much more intelligent and can't relate to all the dumb chumps all around him in the ranks below. He doesn't get it and never will. He thinks he's too smart to stoop down to our level. 

DaveyJones's picture

Heave Ho Hosni only stole 70 billion. childs play

Rider's picture


Seek and Destroy.

We need an Special Forces mission to destroy the most dangerous human on earth!!

For America!

VegasBob's picture

Hopefully, CNN will carry it live when starving masses here in the US decide it's time to string up Bernokio...

limcagoldspot's picture

Actually last 30-100 years are an anomaly.. Middle class is an anomoly.. Rich have always been very rich and poor have always been poor since.. we are just going back to how it usually is.. you guys need to relax and have a drink till you can afford it

Judge Judy Scheinlok's picture


kaiserhoff's picture

Good question.  I don't understand the junks.

I'm seeing more people who don't read ZH behave as if they do.

1 Creating alternate currencies for fun and profit.  Cigarettes work great with all the new taxes as does hooch (especially vodka) and, gotta love this..., viagra.

2 Hiding cash and capital destruction.  More on this later, but even those getting their income from the government don't trust it.  Lots of loot leaving the banks for collectables and hidables.

3 Voting with your feet.  No mass exodus from the States, but a real fear of cities and places perceived as crowded (even Florida).

Want to hear a really wild string of expletives.  Mention Obama in ANY PUBLIC PLACE.

The times, they are a changin'.

Judge Judy Scheinlok's picture




medicalstudent's picture

...and a 'cause of action' is what traffic courts lack since the state can not allege a violation of personal rights (its not a person). and since the judge represents the state the trial is a clear conflict of interest.


if everyone who got a traffic ticket argued this point there would be none.

new radar... i need...


maybe guns and a vest too.

Judge Judy Scheinlok's picture


Blano's picture

The junking has gotten totally out of hand.  Time to remove it.

Cognitive Dissonance's picture

I understand you're new here. Welcome.

Please understand that all caps comments a la Yahoo doesn't work here. Please disable your caps lock mind.

Thank you for playing Zero Hedge the game. Come back soon.

Judge Judy Scheinlok's picture


B9K9's picture

Thanx for the confirmation. Jeez, it's not just the old timers who have gone missing, it's the trolls who at least had a little wit, style & panache. Johnny B, where are you? You too, RNR. Christ, all we're left with now is Harry's troll, Hamy, and these Yahoo amateurs.

Judge Judy Scheinlok's picture




Cindy_Dies_In_The_End's picture

CD has privileges here you don't, Judy so think about the caps thing.


Take your meds and remember the Fight Club rules.


Judge Judy Scheinlok's picture






willien1derland's picture

CD...making a better world one post at a time!

Zero Govt's picture

Plan? ..pitchforks and rope at the ready, it worked 300 years ago and will work again

SheepDog-One's picture

Action plan? Portable guillotines.

LFMayor's picture

I like that thing the Hatians did with car tires and a sitz-bath of low lead myself.

Pants McPants's picture

For several years before the 2008 meltdown we reported on money managers, economists and financial gurus warning of a coming meltdown. They included two Fed governors who warned Greenspan in the early Bush years. And yet, as late as summer 2008 Bernanke, Paulson and Greenspan were systematically dismissing mounting evidence of a mega crash dead ahead.

Here we go again with that damn blogosphere and its 19 crises.....

dick cheneys ghost's picture

jpm, gs, ms, et al.....................and the rothschilds, lets not forget about them.

william the bastard's picture

Paul Farrell is not one of the Bilderberg group but he is the one redeeming feature of MarketWatch.


Sean7k's picture

Which is owned by a bilderberger, thus begging the question...

william the bastard's picture

Well you can't deny that Farrell's column today is a lacerated cold sore on their lip.

Sean7k's picture

Sure I can and do, see my comment below.

The Axe's picture

Bernank is just like the drunken idiot that you had to catch a ride with in high school, from a kegger in some guys farm field. You need the ride, cause you don't want to be stuck 10 miles from town, you sit in the back of the car, just praying you make it home alive, but to scaried to say a word.

Seasmoke's picture

LOL...i did that a few times and i am still scarred from those experiences even 25 years later

Salvatore CFA's picture

Ben actually calls to mind the kid who spent all his after school time brown nosing in the computer lab, programming a Digital PDP-11: Levis's cords, Hush Puppies, one of those plaid shirts with the snaps on the pockets, no date for either junior or senior prom, scored over 700 on the math SAT, and reminded every kid in his senior year calculus class that he got into Princeton -- the kid who ended up as salutatorian, but nevertheless, always got pantsed in gym.



jus_lite_reading's picture

Well, well, well Dr. Deficit. It has come to pass. Like Jesus said, do onto others as you would want them to do onto you.

Silver to $40 in ~3 weeks.

The Axe's picture

FDX  warns   up 2      turn off the terminals