The recent musings of the Great and Powerful Oz Ben Bernanke to Congress have left me once again scratching my head. I cannot fathom how people in the “know” such as Mr. Bernanke can continually portray with sincerity that they have just stumbled upon a new financial crisis of dire importance to the nation and that their previous policy actions have by no means contributed to its development. Even more troubling is that according to them each newly discovered financial crisis just happens to be causing the country’s economy to speed toward a financial cliff. C’mon, how dumb do you think we really are?
The Federal Reserve System as it was originally established was intended to be a mechanism for providing liquidity to the economy in times of severe downturn to avoid economic paralysis. It was not intended to be a quasi national economic guidance council with broad reaching policy power and zero accountability. How it has morphed from the former to the latter really is of no matter. What is of importance is for us to accurately illustrate what it is today. Simply stated, what began as a band aid to prevent severe economic infection has grown into a life support system fully equipped with a respirator and feeding tube.
The fact is our nation’s economy is currently on life support, has been since 2008, and apparently will be until at least after the November election. There is no cure that can be applied by the Fed for what ails it, it is terminal in that sense, the infection has spread much too far and must be left to continue to run its course toward the financial cliff. The problem is that people like Mr. Bernanke and others in Washington D.C. continue to feign surprise at the approaching cliff, refuse to acknowledge the reality of what must be done and deal with the issue at hand.
Just as a loved one’s agonizing about the impending loss of a terminally ill family member must someday turn to grief, policy makers at the Fed must begin to come to grips with what is necessary for our economy to realize sustainable prosperity. Their current approach consisting of taking reactive steps to dull the pain and crossing their fingers that their interventions will produce growth is inadequate. It is based on the idea that each time modest growth occurs in a particular economic sector it has the potential to become a snowball which could possibly start growing in size and mass. Frankly it is an irresponsible gamble and the American people deserve better.
It is too late for those types of measures to have a sustainable long lasting impact on our economy. Common sense says that money is not staying on the sidelines because the interest rates are high and need to be more desirable, they cannot get much better than they are today. Frankly, most people are not driven to borrow money due to its low cost to them. What drives them is their current and future ability to pay back the money they borrow, which is directly tied to their level of income versus cost of living and their prospects for sustainable employment. My history in “hard money” lending supports that theory. Bottom line, consumer borrowing is much less rate dependent than it is repayment ability dependent.
So, my advice to the Fed is to pull the plug on the easing and extreme rate manipulation. They are inconsequential at this point in the game. It is time for the Fed to bite the bullet as it is glaringly apparent that no self preservation focused politician has the integrity or courage to do so. The Fed must raise interest rates to appropriate levels, stop purchasing or refinancing troubled Treasury assets, and force Congress and the President to do their jobs and lower the burden on businesses through whatever means necessary.
There is no doubt that doing so will be extremely painful for all of us in the short term. But guess what, we all made some very stupid decisions leading up the crisis of 2008 and stupid hurts. Let’s be adults and quit dulling and deferring the pain. Only when we get through this can we sit back and reflect on the mistakes we made getting to this place, add them to our never again list, and move on. So man up and get on with it Mr. Bernanke, it’s time for you and your cohorts to pull the plug!
Anthony is a passionate advocate for the reclamation of the American way. He is dedicated to reaching those in his generation who have been hypnotized by the country’s culture of apathy and corruption. Having personal experience with many of the situations that have contributed to society’s downward spiral he is committed to helping others take back their futures, be responsible for their destinies, and build positive legacies that span generations. Anthony lives in the Seattle area with his wife Shannon and their three young sons. He holds a B.A. in Business Administration, a M.B.A. in Management, and is credentialed as a Project Management Professional (PMP) through the Project Management Institute. Anthony is currently employed as a Project Manager in the power distribution industry. For other commentary by Anthony follow him on Twitter at @ac_curtis or check out his blog “Wake Up Y’all” at www.wuyall.com.