Wednesday, June 24, 2009

Federal Reserve Chairman Ben Bernanke Quietly Seeks Increased Powers

According to this NY Times article, The Helicopter is working behind the scenes in search of increased powers for the Fed and thusly himself.

Of course, this is akin to the head of your municipal water company poisoning the water supply, then providing a questionable version of an antidote that at best postpones the pain but doesn't cure the illness asking for greater control and freedom over the water supply in order to protect its users from man-caused dangers in the future. Nobody would ever contemplate allowing that to occur. It is absolutely insane. And yet, this seems to have a better than 50:50 likelihood of occuring with our money supply and financial system oversight!
But behind the scenes, he has been a forceful proponent of giving the Fed more power, both defending his management of the economic crisis and arguing that more authority would help the agency act more decisively to reduce the chances of a recurrence, according to interviews with lawmakers and officials from the Fed, the Treasury and the White House.

Despite criticism by some lawmakers that the Fed failed to anticipate the problems that led to the crisis, Mr. Bernanke has told associates that such critics fail to recognize the extraordinary actions taken by the central bank over the last year.

Mr. Bernanke believes the Fed’s actions have played a major role in averting a possible second Great Depression, according to government officials who know his thinking. Those steps, the Fed chairman has told these people, demonstrate that the agency is up to the larger task assigned to it by the Obama administration.

Mr. Bernanke has one important champion — President Obama. On Tuesday, the president reinforced his preference for an enlarged role for the Fed in a news conference at the White House.
As we have addressed several times, including in one of our favorite posts on the nature of indebtedness, the Federal Reserve System (inclusive of fractional reserve banking with demand deposits considered core deposits available for long-term lending) holds the largest helping of responsibility for the crisis we find ourselves in today. It is damning enough that we have continued to allow The Fed to operate virtually unfettered and unchecked, but to actually contemplate expanding its mandate is beyond sanity.