Bernanke’s printing only delayed the pain

bernake printing money

It is interesting to hear (some) people praise Mr. Bernanke for having “saved” the United States and the world from Great Depression II. This praise is misplaced to say the least.

As Peter Schiff points out in the attached article Mr. Brenanke didn’t solve anything. He jacked the US and world economy with artificial stimulants, trillions in newly printed dollars. He juiced Wall Street which is now swimming laps in pools of funny money while everyday people continue to struggle, especially the poor.

The nature of poverty is ongoing struggle of course but when real wealth is created, when new businesses flourish, when organic economic growth occurs, more poor people are lifted out of poverty. Under Bernanke those with assets already have done very well (for the time being) while those who would like to own assets have seen that dream slip away. The “underclass” we’ve heard so much of over the past couple of decades has truly become permanent. 1 in 6 people in this country are fed by the government, and the number continues to grow.

Debt burdens have shifted from consumer debt, to student debt as young people try to wait out the slow economy like the kids of the 60s tried to wait out the Vietnam War. When the economic refugees are forced out into the real world these students often find that there are no jobs available which pay enough to enable them to pay back the piles of debt they’ve accrued. A giant anchor hangs around the ankle of a generation.

So our “recovery” has benefited those who were already rich. Those with assets have seen these assets do well as juice flows through the system. The aspiring, the poor and the young, have to a large degree been shut out, and that isn’t much of a recovery. Just wait until the next big downturn comes. We’re about due.

(From The USA Today)

The actions taken by the Bernanke Fed have no precedent, and he has admitted to flying blind. But the bond buying (known as quantitative easing, or QE for short) that created feel-good asset bubbles in stocks, bonds and real estate was the easy part. To complete the process, the Fed must conjure an exit strategy to dispose of the nearly $4 trillion of assets that it now holds without puncturing any of the bubbles that its buying spree created.

Bernanke is like a novice airline pilot who has managed to take off and fly steady. The passengers celebrate the smooth ride, but he (or, more accurately, Janet Yellen) still has to land the plane. On that front the Fed remains clueless.

Click here for the article.