Who is Ben Bernanke?

madhedgefundtrader's picture

I have spent many years prowling the marbled halls of the capital building in Washington, ambushing politicians in the underground passageway connecting the House and the Senate for off-the-cuff comments, sitting in on off-the-record, deep background interviews, and even occasionally offering some congressional testimony.

One thing I learned about the harsh realpolitiks of our chief governing body is that when one party shows the least amount of weakness, the other launches a vicious,  coordinated, all out assault across many fronts. So the alarm bells rang big time for me when the Democratic candidate lost the Massachusetts Senate race, redefining the concept of incompetence and complacency to convert a 31 point lead into a 4 point loss. The “black swan” has landed.

Of course, Ben Bernanke will suddenly face the battle of his career over his Senate confirmation! Both the Republican and Democratic lynch mob are making the case that you don’t give an arsonist a medal for putting out the fire. The urge to conduct a human sacrifice to atone for the financial crisis is huge. Unsurprisingly, investors voted with their feet, trashing the Dow for 500 points, pricing in a new quantum leap in uncertainty for the global economy.

Since nothing less than the fate of the free world depends on the outcome, I thought I’d touch base with David Wessel, the Wall Street Journal economics editor, who has just published  In Fed We Trust: Ben Bernanke’s War on the Great Panic.

I doubted David could tell me anything more about the former Princeton professor I didn’t already know. I couldn’t have been more wrong, as David gave me some fascinating insights into the inner soul of our much vaunted chairman of the Federal Reserve. 

Bernanke was the smartest kid in rural Dillon, South Carolina, who, through a series of improbable accidents, ended up at Harvard. He built his career on studying the Great Depression, then the closest thing to paleontology economics had to offer, a field focused so distantly on the past that it was irrelevant. Bernanke took over the Fed when Greenspan was considered a rock star, inhaling his libertarian, free-market, Ayn Rand inspired philosophy in great giant gulps.

Within a year the economy had suddenly transported itself back to the Jurassic Age, and the landscape was suddenly overrun with T-Rex’s and Brontesauri. He tried to stop the panic 150 different ways, 125 of which were terrible ideas, the remaining 25 saving us from the Great Depression II. This is why unemployment is now only 10%, instead of 25%.

The Fed governor is naturally a very shy and withdrawing person, and would have been quite happy limiting his political career to the local school board. To rebuild confidence, he took his campaign to the masses, attending town hall meetings and pressing the flesh like a campaigning first term congressman.

The price tag for Ben’s success has been large, with the Fed balance sheet exploding from $800 million to $2 trillion, solely on his signature. The true cost of the financial crisis won’t be known for a decade. The biggest risk is that we grow complacent, having pulled back from the brink, and let desperately needed reforms of the financial system slide.

How Bernanke unwinds this bubble will define his legacy. Too soon, and we go back into a real depression. Too late, and hyperinflation hits. That’s when we see how smart Bernanke really is.

Oh, and by the way, there is zero chance of Bernanke losing the confirmation. The entire kerfuffle was invented by a bored, but hungry media.

For more iconoclastic and out of consensus analysis, you can always visit me at www.madhedgefundtrader.com , where the conventional wisdom is mercilessly flailed and tortured daily, and where you can also catch me on Hedge Fund Radio weekly.

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Anonymous's picture

Hmmm...MHFT sounds a bit like Jim Cramer, Mad Money errr...Mad Hedgefund runner himself. Please, if this is you, don't post your BS on this great site. Clearly it's sniffed out in a heartbeat

Eally Ucked's picture

MHFT is right hand of Cass Sunstein.

Ned Zeppelin's picture

I think MHFT is a joke.  Don't get mad.  Laugh.  He is a fictional village idiot, the voice of what the MSM would have us believe.  It's actually very savvy, in a way.  He lies constantly and makes no sense - a Mad Hatter for the Noughties.

No More Bubbles's picture

Your rating: 1  Average: 2.8 (16 votes)

If I could have flagged this piece as junk, I would have.  Please spare us this guy's drivel.

Anonymous's picture

Bernanke studied the 1930s depression. He studied hard because he was told the day would come when he would use his knowledge to mimic that previous event with Kenseyan tactics.

Has anyone ever looked at Bernankes depressed look. He knows exactly what hes doing, and how detremental it is . He also is aware of what is about to happen to America and the world as a whole. TPTB have picked a good man for this demolition job.

lawton's picture

Either Bernanke is the most crooked man on the planet or he has the least amount of common sense on the planet. When you watch his comments about the economy and the state of housing leading up to the housing collapse it just leaves you speechless. How can this man be reconfirmed if the fix isnt in courtesy of the big investment banks.

Anonymous's picture

The real system is built on an unending mutual partnership between the USA (consumer/borrower) and China (manufacturer/slave owner/lender). The parnership controls the world forcing other Asian Countries to buy USA dollars and screwing the EU. Equities have consolidated back to the 50 day MA and are ready for the next leg up when Jimmy and Ben are cleared of all wrong doing tomorrow, confirmed on Thursday; they all on to the weekend cocktail parties. All drama, no substance. The partnership, including GS has got the power!! Get in the way and lose your shirt.

Anonymous's picture

Is it possible that Obama and Bernanke were in cahoots in ramping the stock market starting last March?

Is that why Obama is working so hard to get Bernanke's reappointment approved?

Obama made his timely market call based on something.

If it becomes public knowledge that Obama authorized Bernanke and the Fed to make the market a one-way street for six months to a year, what are the implications of that?

Think they worked out how high and for how long?

How do you stop?

No wonder individual investors haven't committed more funds to the stock market. I think they already have a sense of what's been going on.

Anonymous's picture

madhedgefundtrader, troll harder.

Anonymous's picture

We're in a Depression. I'll repeat, a Depression.

Why is that? Well beyond 22% real world unemployment (unprecedented really considering our total population number), is the fact that this "recession" has now gone on far longer than it should have relative to all the stimulus' programs and extremely low interest lending rates.

By all indications it's nowhere in sight where this catastrophe begins to end either.

By next year after the November elections they'll start using the 'D' word - mark my words.

Anonymous's picture

If you want PMs to run up, then we need B52 Benny printing like crazy ... and he will!

Dirtt's picture

Unemployment?  You mean I should be looking for employment?

Anonymous's picture

Ben Bernanke is not smart. He is an incompetent boob. He clearly does not understand the difference between the temporary deflationary effect of the destruction of credit money, and the permanent hyper-inlationary effect of increasing the monetary base by an amount that is approximately equal to the destroyed credit money.

The Federal Reserve is just a group of guys, sitting around, deciding when and how much money to print and give away to their friends. Bernanke is one of them. I hope he is not confirmed as it will be a confirmation, for all our children to see, that failure is rewarded in America.

10044's picture

Ok that's it, I'm not going to waste my time reading any more of yor crap. Unemployment at 10? What are smoking bro??
Like I've said before, this is ZH, not HuffPo.

ghostfaceinvestah's picture

Which if his programs exactly averted a Great Depression?

Sheila Bair and Henry Paulson averted the panic in the markets by guaranteeing interbank lending and increasing deposit insurance and extending it to money market funds.

All Bernanke did was print money and hand it out to Wall Street.

masterinchancery's picture

Absolute Main Stream Media crapola--and I suppose the Bank of Japan and all their corrupt politicians "saved" the Japanese economy 20 years ago with the same crony capitalism and keynesian deficit spending? 

mouser98's picture

interesting take, but i suspect you are giving mr. bernanke too much credit, or as the case may be, too much blame.  i can only guess that had mr. bernanke suggested letting the banks fail in '08, he would have been shown the door and a suitable replacement found, one with more sympathy for the banks (who own the Fed).  too, i think you are way off base suggesting that he averted the Great Depression II... i believe that not letting the chips fall where they may, just as in the '30's will have resulted in creating the Great Depression II.  it would have been extremely painful to stand by and do nothing as the global financial system collapsed, but it would have been much less painful than what we will go through since we did not allow this to occur.  and finally you suggest that we desperately need reforms of the financial system.  we only need one reform, and that is to remove the US taxpayer as the lender of last resort.

saturno_v's picture

 

I agree that Bernenke confirmation it's a done deal...the last end of the week market dive probably scared the bejesus out of recalcitrant senators..think about their pension and other investment tied to the stock market....

 

I do not agree he saved us from a new Great Depression

 

Real "official" unemployment rate (U6) is 17%...real "real world" is even higher.

 

In the 1930s pretty much everybody over the age of 16 was considered part of the workforce and accounted for....not anymore...if we ever get to an official rate of 25% it would be like 50% in 1932 terms...

 

You will not see bread lines again, nowdays we have food stamps and subsidies mailed directly to you....however charity organizations and food banks are overwhelmed with requests....tent cities are sprouting everywhere (look at Cali), couple here in Seattle in the last month alone...

 

I suggest to you and your friends to spend a little bit more time in the real world rather than strolling around DC....

 

 

 

 

Sherman McCoy's picture

I liked a lot of comments on this piece, particularly the first one for #206269. In general, I believe ZH is ill-served by allowing this windbag another forum - he has his own website. I read ZH for it's unconventional views, even if I think a lot of them are wrong. If I wanted another version of "Mad Money", really, I'd ask for it.

ChickenTeriyakiBoy's picture

Dude is a douche for sure. It would have been better for all of us if Panetta's "five gorillas built like brick shithouses" had rendered this asshat to Bagram

Mr Lennon Hendrix's picture

"Oh, and by the way, there is zero chance of Bernanke losing the confirmation. The entire kerfuffle was invented by a bored, but hungry media."

I agree that it is highly unlikely, and I will say more than a hungry media (media is lame not hungry) it was a beta test to see if 'merica was starting to understand that "loose" monitary and fiscal policy does not serve their interests. 

"Too late, and hyperinflation hits."

Well, guess what?  TOO LATE!!!!!

35Pete's picture

Wow. This op-ed is so full of sucktitude that I'm speechless. ZH, I hope this was an aberration and not the introduction of an establishment parrot into the house.

Anonymous's picture

MHFT needs to be banished from this site. This article is a perfect writeup by a neocon who interviews another Neocon david weasel (his mom named him well!). Shut out these morons who think they are the "chosen ones" to lecture us about how great they are because they walk and rule the corridors of DC. The people of America hate these turds! So how is this article any different from what Fisher wrote about BB today? How about more worthless paeans from BB's underlings? Mishkin, Plosser, Kohn, Warsh, any one? All these writings don't demonstrate you are "smart". It only shows you have the right last name. you know what i'm sayin...

Anonymous's picture

"Bernanke took over the Fed when Greenspan was considered a rock star, inhaling his libertarian, free-market, Ayn Rand inspired philosophy in great giant gulps."

Wouldn't the Randian thing be to abolish the Fed, not use it to loan taxpayers' money out at below market interest rates?

Anonymous's picture

Giving people who fail money out of the pocket of other people.

Neither Ayn Rand or libertarian, I'd suggest complete bollox.

Don Smith's picture

+10.  Greenspan may have been enamored of Rand, but he didn't practice that way.  ZIRP is not libertarian, nor is it objectivist.  It's interventionist.

Anonymous's picture

This madhedgefund trader just likes to brag . He puts in his news letter how he buys $10,000 dresses for his girlfriend to go to political functions. Who gives a sh%$#t

blueskyscottsdale's picture

Bernanke is only 50% of the problem. The Fed's mandate is not to create jobs. That's the domain of Congress. The Fed's mandate is not to create/curtail the US federal government spending plan. That is the domain of White House of the day. Be glad you're not the guy trying to keep the markets stable when the fools on Capitol Hill in BOTH PARTIES don't know a damn thing about the basics of money which is why the United States government would do very well to hire somebody who knows diddly about money ie Suze Orman or equivalent. Obviously neither party in Washington or in any US state has a track record showing even a modicum of rudimentary understanding regarding Personal Budgeting 101. It shows in the failed country that is America. No, elections in November are not going to deliver anything different because after 2 terms in office and now in year 9, the Republicans have ABSOLUTELY NO PLAN for deficit reduction, job creation, industrial policy, energy independence etc. Yeah, let's elect the Republicans who ran the country into the ground again even though this party has learned nothing whatsoever. When the Republicans deliver the competent aforementioned policies, those policies can be judged on how well they have been thought out.

Anonymous's picture

Governor Frederic S. Mishkin
At Bridgewater College, Bridgewater, Virginia
April 10, 2007

Monetary Policy and the Dual Mandate

According to this legislation, the Federal Reserve's mandate is "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates." Because long-term interest rates can remain low only in a stable macroeconomic environment, these goals are often referred to as the dual mandate; that is, the Federal Reserve seeks to promote the two coequal objectives of maximum employment and price stability. In the remainder of my remarks today, I will describe how these two objectives are consistent with our ultimate purpose of fostering economic prosperity and social welfare. I will then talk about some important practical challenges in implementing these goals.

http://www.federalreserve.gov/newsevents/speech/mishkin20070410a.htm

Anonymous's picture

-1000

Anonymous's picture

Alan Greenspan didn't do much in his last 4 years that could be considered libertarian. He's in bed with Lord Keynes.

Anton LaVey's picture

This is why unemployment is now only 10%, instead of 25%.

According to shadowstats.com, the "real" unemployment figure is closer 22%.

Maybe this is not a depression, but it is getting awfully close.

Anonymous's picture

Ummm, so what does Shadowstats 'say' the "real" unemployment figure was back in the great depression?

Don't use quotes, use comparable figures when trying to make a point. Thanks.

That figure would have been a lot different if infant mortality wouldn't have been between 100 and 150 per 1000 births and life expectancy of roughly 50 years old for the generation preceding, no?

Weed out the old and useless is what I say we need to do. Today's unemployment figures are totally cluttered with them.

Anonymous's picture

Why don't you just get started on that 'clutter-clearing' and 'weeding-out' of the 'old and useless.' I'm sure they have already been tagged properly so won't have trouble identifying them.

I recommend using a scythe -- people are apt to REPORT you if you go around trying to do this with a jug of ROUNDUP. (Inorganic chemicals, dontcha know)

mouser98's picture

you should check out the Carnegie Institute and see if there is a job opening in the Eugenics Dept.

WaterWings's picture

Not to mention the Biggie-sized foodstamp lines. More than the entire state of CA with their mouths open. Tweet-tweet.

Anonymous's picture

"Shall I print 20 gazillion or 40 gazillion?
That is the question"
Banana Ben - "Of gazillions and depressions"

CCCP

Anonymous's picture

Unsurprisingly, investors voted with their feet, trashing the Dow for 500 points, pricing in a new quantum leap in uncertainty for the global economy.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Ben is trashing the market. Every time he feels a little heat. He cries wolf and tells his prop desk and a select few to short everything. Did you get last nights memo,MHFT?

Commander Cody's picture

Mad One: I'd say you need air time in your Gulfstream.  Then, actually land.

Angry-Taxpayer's picture

Our state says we are officially at 11.8 % un-employment with it's latest figures...

Government folks I've spoken with state they see levels hanging around the 20 - 22 % mark...

Bullshit Obama stats - vs - Reality stats

Real stats win...

We even received a good share of Obamanation theft tax funds to prop up bull-shit around here...

Not a twitch on the meter...

Mad one and Dr Smart B need to herd more Sheeeeeeeople around...  Sticks not included...

 

Anonymous's picture

What value does "madhedgefundtrader" ever bring to this site? Constantly implying how important and connected he is and then spewing the same shit you could read from any empty suite the MSM invites to pontificate. He implies he received fascinating insights into BB then spouts the same bio I've read no less than 20 times before. More insulting is he tries to sneak in the idea that BB saved us from a depression.
Can't speak for anyone else but I think you're an insecure tool who doesn't understand that no one who reads ZH is impressed. Please go away.

ChickenTeriyakiBoy's picture

So true. Apart from the fact that the name-dropping is ludicrous and utter bullshit, it's completely unnecessary. This guy pisses me off. It's like a kid writing a ninth grade English paper and consulting the Oxford Dictionary of Quotations for some pithy words to illustrate a completely mundane point. But oh it's so enlightening because one time Shakespeare or  Nietzsche said something about the topic. 

 

The idea that this guy wrote for the Economist is laughable. 

el Gallinazo's picture

I am surprised to see ZH featuring such rubbish. Single handedly prevented GD v. 2.0. In about a year, pull your head out of your ass and look around.

Anonymous's picture

Agree

Pulled us back?

More like mashed down on the pedal sending us hurtling toward Greatest Depression and Soverign default.

AndyC

Anonymous's picture

With that expansion in the fed's balance sheet you'd think people would be able to find something to eat...what's that the dining room at TBTF is overflowing? how's that? Benny's beans redeemable at fed's counter....

What a success....but not for them...

Families Struggle to Afford Food, Survey Finds
http://www.nytimes.com/2010/01/26/us/26food.html?hpw

Winisk's picture

Since nothing less than the fate of the free world depends on the outcome

An obvious exaggeration but I can't determine if this still reflects an opinion that this one man solely has the sufficient smarts to rescue the world, and should therefore be reconfirmed.  Heaping this kind of praise and responsibility on any one person is nutty and displays a predilection of a worshipping mentality.  This need not be complicated.  We, the world don't need smarts emanating from the Bearded One to weasel ourselves out of this mess.  What we need is some time tested common sense, leadership, sacrifice and hard work. 

curbyourrisk's picture

"Bernanke was the smartest kid in rural Dillon, South Carolina, who, through a series of improbable accidents, ended up at Harvard." 

 

Listen....the only thing of any substance that was produced in Dillon, SC.....was the ability to stay at "South of the Border" on the way to Florida as a kid.  I loved Pedro and everything there including the huge fireworks shop.  Haven't been there in years.  Pedro sez, "C-Ya Bennie......you're fired"

Don Smith's picture

"You never Sausage a Place!"