It’s All Bernanke’s Fault

This isn't really that new, but the first time I've had a chance to write some thoughts about it since it all started. Apparently Ben Bernanke is coming under some heat for his actions as Fed Reserve Chairmen. I just have a few short thoughts about this. (And please excuse any rambling – I'm trying to get this out before getting ready for work.)

First – am I the only one that notices how ridiculous these Senate "investigations" are? I'm not sure where Congress got the power to put private citizens on trial (maybe you could help me with that one) – but they've been doing this an awful lot: bank executives, oil executives, etc. Admittedly, Bernanke as a government official is a little different, but it seems the Senate holds "hearings" and "investigations" to allocate blame for things they themselves had a pretty big hand in. How preposterous is that! It's like the kid who broke his mom's expensive vase playing baseball in the house, and then interrogates his sister to try to ward off the blame. I'd say it's not working… but isn't it?

Second – Bernanke was just doing what everyone was pressuring him to do. As the Fed was lowering rates, pundits were constantly questioning, was he doing it fast enough? Should he be lowering rates faster? Now they're saying, HE's going to cause inflation! HE's going to ruin any economic growth we do have with higher prices. Do they forget the pressure there was to lower rates in the first place? At the last Fed meeting, people couldn't decide WHAT they wanted the Fed to do, but there was no resounding, "OK, let's start raising rates again." Why? We're still in a recession, and people still want the federal government to play God with the economy.

Third – I constantly hear people talking about how this is the longest recession in 50 years, or the worst, or both. I don't know everyone in the United States, but things really aren't that bad. Even so – doesn't it seem like the more government intervention we have to "steer the economy back," the longer things take to correct themselves? The best example of this, of course, is the Great Depression. I'm no expert, but it seems to me when you continually muck around in the economy, businesses don't know what to expect from the government and will hold back their capital until they do. Furthermore, a lot of the mucking around, like taking over industries does far more harm than good and can certainly be expected to have long-lasting results. People talk about how Obama has offered us a New New Deal, and we should be saying no-thank-you. If you're not familiar with all the finagling and worsening that was done to the economy during the Great Depression, I highly recommend this book.

Fourth (and final) – This follows from the third. Wake up people! The economy is like a cat – it always lands on its feet. Unless you're trying to juggle it, which the government usually does. What are we so afraid of? Although the economy is not 100% in your control, it IS 100% in "the people's" control, meaning unless everyone collectively wants to stay in a recession, things will get better. If the people who engage in the economy themselves do not have the power to drive the economy to growth, what makes us think the government can control it? It's an illusion! Sure, the government can do specific things to try to encourage growth (like lowering taxes), but this is not like fine-tuning a piano. It's more like shooting the piano with a shotgun and hoping more of the keys will be in tune than not. I understand the feeling that "someone is taking care of this mess." And there is of course some merit to the government's ability to give people hope that it's all going to be okay. But the fact is, it would have been better, faster, without asking the government to step in and do what it is immeasurably ill-equipped to do.

I guess the main take-away from this (aside from all the tangents) is that the only people qualified to help the economy are those who compose it – the people who, by their own myriad economic decisions, make their own fine-tunings toward their own optimal result. If you have 300 million people optimizing their own situations – what is the logical result of that?

When the government steps in to interfere with that, there will always be blame to award because the result is pretty much never good. Don't people ever notice how the government makes some decree to "fix" something, then it has to figure out who was to blame for the first decree and issue second and third and fourth decress to "fix" what it did in the first place? (Social Security started WHEN and they're still fixing it? Medicaid? Medicare? If a government program constantly needs help, maybe it was a bad idea in the first place!) Sure, sometimes Congress or the President can pass off the blame to the evil executives or the irresponsible free market, but that only covers their tracks until the ugly results of their current actions start showing up.

And don't say free market is how we got into this mess. It's not. We haven't had an acceptably free market in over a century – how do we know what our "freedom" caused when it's mixed in with so much government control? We can't, until we get rid of the government control.