Last week, a photo of the oddest couple in finance [12], Peter Schiff and Ben Bernanke together "celebrating the economic recovery", promptly went viral.
[13]
As it turns out there was more to the story.
On his Friday podcast [14], Peter Schiff told the story of his encounter with Ben Bernanke at the SALT Conference last week where he took the photo above. Peter talks about his close encounter of the Bernanke kind 13:30 into the podcast.
Below is a transcript of the relevant section:
“Speaking of a clueless Federal Reserve, I happened to have an encounter the other day with former Federal Reserve Chairman Ben Bernanke. Many of you may have seen the picture of me and the former Chairman. We were at a cocktail party, and I posted that picture on my Facebook page…
“I’ll give you all of the details. So first of all, Ben Bernanke was there to speak at the SALT Conference… He was paid, I believe, somewhere between $200-250,000 to basically hit the soft balls that were lobbed to him by Anthony Scaramucci, who was the host of this conference… At least make the guy do something for $200,000 – let me question him. In any event, he probably wouldn’t agree to that…
“I was watching from the speaker’s lounge… He walks out, and he’s accompanied by his secretary. He doesn’t have a big entourage… I see him and I come right up to him and I say, ‘Mr. Bernanke.’ I put my hand out and I say, ‘Peter Schiff.’ I can sense from his body language and the way he looked that the name was familiar. I think he knew something about me, but he didn’t necessarily acknowledge it. I think he said something like, ‘Oh sure.’ But I was pretty sure he knew who I was at that point. I wanted to make sure, because I didn’t want to have a conversation under false pretense.
“So the first thing I said to him, ‘Look, I gotta let you know, full disclosure, I’m probably your biggest critic.’ To which Ben Bernanke replied, ‘Well, you got a lot of competition.’ It’s probably true. There is a lot of competition. There are a lot of people who criticize Ben Bernanke. But I think I am his biggest critic. I’ve been criticizing him for longer than most people, and I certainly do it more often and more loudly.
“After that brief exchange I said, ‘Do you have a moment to chat? I’d love to talk to you.’ He said, ‘No, I don’t, I really got to go.’ I said, ‘Alright, how about a quick picture then?’ But that was it. He was gone. He was whisked away by his female handler, and I thought, ‘Well that was it. I’m not going to see that guy again.’ He was rushing to deposit his check, right?
“Later that evening, they have a cocktail party for the speakers. I get to the cocktail party, and who do I see standing there all by himself but Ben Bernanke. I got a drink and then went over to Mr. Bernanke who was still standing by himself, surprisingly. I said, ‘Mr. Bernanke, I thought you had to leave.’ He said, ‘No, I’m still here. I’ve got time for that picture now, if you want to take one. Which I thought was quite nice of him, because he remembered that I wanted a photograph, and he didn’t have time for it. Now he sees me and he asks if I would like to take a photograph…
“Initially I was thinking what do I do to spice this photograph up? Just a photo of me and Ben Bernanke. What’s the big deal? I thought maybe I should do the rabbit ears behind his head, but I felt kind of awkward doing that considering he had so graciously reminded me that I wanted a photograph and offered to pose with me. I felt that would be inappropriate of me to take advantage of him or make fun of him, so it was just a normal photograph…
“We got the photograph out of the way. Then I wanted to talk to him. The first thing I wanted to do was I wanted to give him my version of why the economy is so screwed up and why everything in it is wrong. The last thing he wanted to get was a lecture from me, but that’s what I tried to give him. But I tried to give him the Cliff Note version. I did want to ask him some questions, but I wanted to get his reaction to my take.
“I started talking about the housing bubble and the financial crisis and how the Federal Reserve caused that with its low interest rates. He said that no, it wasn’t that; that the interest rates had nothing to do with it. He first told me that the housing bubble was caused by Fannie and Freddie. At least he’s trying to blame the government. I said, ‘Look, Fannie and Freddie have been around since the 30s. We didn’t have that big housing bubble until the Fed happened to have interest rates at 1%, and then raised them very slowly. That wasn’t a coincidence.’ He said, ‘Well, it was subprime mortgages that did it.’ I said, ‘Subprime mortgages? But do you understand how subprime mortgages worked? They were all adjustable rates, and the most popular feature, what made them so enticing and affordable was the teaser rate. The fact that you can get a low rate of interest for the first few years. That was all because of the Fed. So if you’re going to blame subprime, you’ve got to blame the Fed, because the Fed is what gave life to subprime. It made subprime affordable.’ He also blamed regulation. He said regulation first before he said Fannie and Freddie. I said, ‘Well what regulations are you talking about?’ And he said Fannie and Freddie, which weren’t really regulations, they’re agencies. But he was really trying to lay the blame on the housing bubble on capitalism, because of subprime, and on the government, because of Fannie and Freddie.
“I said, ‘Wait a minute. If regulation and subprime and Fannie and Freddie – if that’s what caused the housing bubble, why didn’t you warn us about that in advance? Why didn’t you go in 2004, ‘Hey, we got a problem. We got these bad regulations, we got Fannie and Freddie, we got subprime , they’ve created a housing bubble! This is going to be a disaster!’’ He didn’t say any of that. He said the opposite of that. In fact, when he was asked specifically about the housing bubble, he denied that it existed. If it was being caused by the things that he said, why didn’t he warn about it? Because it wasn’t caused by those things…
“I tried to ask him some questions and that’s when he really wanted to end the conversation. The first question I said, ‘Mr. Bernanke, you’re so sure that you’re right. I don’t know how you can be so sure, because interest rates are still at zero and the Fed’s balance sheet hasn’t shrunk. You said you weren’t monetizing the debt when you talked to Congress. You said the Fed was going to sell the bonds, but none of them have been sold. They’ve all been rolled over. So how are you claiming victory when you haven’t exited? You haven’t raised rates, you haven’t shrunk the balance sheet. You were wrong in the past. You didn’t see the financial crisis coming. You told us there was no housing bubble. You said subprime was contained. So you were certainly wrong then. So how do you know you’re not wrong now? Is there anything that might change your opinion and get you to rethink and maybe admit that your outlook is wrong?’ I forget the exact words.
“Instead of answering the questions, he just patted me on the shoulder… And just kind of gave me a little smile and that was it. He kind of turned. By then there was a couple other people around us. He started talking to somebody else. It was clear to me that he didn’t want to answer the questions. After all, I’m not paying him $200,000, so why should he answer my questions. I don’t know, maybe he didn’t want to answer them. I didn’t get the sense when I talked to him that he was lying to me. I thought he really believed what he believed. He seemed that way. i’m sure all the praise has gone to his head. He thinks he’s save the world. So he did seem sincere… Who am I? I’m just this guy trying to talk to the former Fed Chairman and tell him what a lousy job he did. He probably doesn’t want to hear that. He wants to talk to somebody who will tell him how great he is. That was the last I talked to him.
“Later on that day, somebody came up to me… I was on a panel for forty minutes. The first ten minutes were the former Prime Minister of Greece talking to Steve Forbes… The highlight was me arguing with Gene Sperling. That’s where I got all my applause. Gene didn’t get any. He was the former economic advisor to President Obama. He got no applause. I got all of the applause. I even got laughter… I was saying some funny things. Funny, because they were true…
“This guy comes up to me. He says, ‘I was talking with Ben Bernanke. He was saying some bad things about you.’ So he’s already talking smack behind my back. I don’t blame him. I got no problem with Ben Bernanke saying bad things about Peter Schiff, because I say bad things about him all the time. What’s fair is fair…”
