Bernanke to savers: Suck it up for the 'greater good'
When Ben Bernanke last week answered a question about how the Fed’s policy to drive down interest rates was impacting savers' ability to find decent CD rates, I felt like a batter tossed a hanging curveball.
"I think the response is," the Fed chief lectured us, "that there is a greater good here, which is the health and recovery of the U.S. economy. ... After all, savers are not going to get very good returns in an economy which is in a deep recession."
Who couldn’t whack that one right out of the park?
When addressing Bernanke’s Depression-era notions of how our economy functions, the problem isn’t finding factual and analytical flaws.
It’s knowing where to begin.
First, as a saver, I’d vastly prefer a deep recession to a financial system manipulated by the Fed.
At least in a recession, given some marketplace latitude to set interest rates, I’d get more than nothing for my money.
And maybe I’d even get stable prices.
Second, although Bernanke won’t admit it, he clearly doesn’t want to be the Fed chairman historians will accuse of letting the air out of the balloon.
With our housing and financial services sectors so dependent on leverage and low interest rates, the only way Bernanke can allow rates to return to historical norms, without collapsing asset values, is to create inflation -- the very thing he’s supposed to be fighting.
Third, I’m sorry, but monetary policy just hasn’t served the "greater good" in any meaningful way.
Bernanke’s attempts to justify ultra-easy money, in light of sluggish GDP growth and persistently high unemployment, are pathetic.
"Health and recovery" haven’t exactly been hallmarks of his Fed stewardship.
And he speaks a different language than the rest of us.
To him, a "saver" is apparently someone seeking "very good returns."
Presumably, when faced with artificially low interest rates and a phantom "wealth effect," he’s happy to try to achieve those returns risking his savings in the stock market.
Bernanke’s concept of a "saver" is as twisted as his concept of "inflation," which doesn’t exist in his world, populated as it is by strange beings who don’t eat, drive a car, heat a home or visit a doctor and, even then, don’t mind their money shedding 2% of its value annually.
I’m counting the days until Jan. 31, 2014, when this chairman will be history.
History we savers will want to forget.