bank rates

Bernanke To Seniors: “I Didn’t Throw You Under The Bus!” … But Yeah, He Pushed Us

Ben Bernanke, having relinquished the mantle of Federal Reserve chairman, has now joined the less lofty ranks of financial bloggers (like me).

His posts appear in Ben Bernanke’s Blog on the Brookings Institution website.

Brookings is a Washington-based think tank, where Bernanke is presently a “Distinguished Fellow in Residence.”

Ben Bernanke

Ben Bernanke

His inaugural blogging effort raises a question vexing many seniors: “Why are interest rates so low?”

“If you asked the person in the street,” writes Bernanke, “he or she would likely answer that the Fed is keeping them low.”

According to Bernanke, “that’s true only in a very narrow sense.”

The real truth, says the ex-Princeton professor, employing a nuanced circular argument relying upon such esoteric concepts as “inflation-adjusted interest rates” and “Wicksellian interest rates,” is that “the state of the economy, not the Fed, ultimately determines the real rate of return attainable by savers and investors.”

Not surprisingly, Bernanke doesn’t bother to specifically address the fact that the Fed’s unprecedented zero-interest rate regime has now lasted over six years and its quantitative easing programs involved the purchase of trillions in government and agency debt.

Apparently, his heavy-handed, behemoth government agency was merely reflecting the sluggish state of our economy.

I guess that, between the scholarly Bernanke and the untutored “person in the street,” I side with the latter.

The post also addresses two “confused critiques” of Fed policy.

One is “that the Fed is somehow distorting financial markets and investment decisions by keeping interest rates ‘artificially low.’ ”

Not so, asserts the former bureaucrat.

Once again relying on circular reasoning, he posits that it’s lack of strong economic growth, not the Fed, that has kept rates low.

And I suppose that same slow growth accounts for record-high stock market values, because, as everybody knows, a weak economy always produces not only low interest rates but booming stock prices as well!

Huh?

Bernanke also rejects the notion that his monetary policies amounted to “throwing seniors under the bus.”

Here, he tells seniors we’re too short-sighted. He thinks that “a premature increase in interest rates engineered by the Fed” would have “likely led after a short time to an economic slowdown and … lower returns on capital.”

Sure. Right.

Frankly, I feel I’ve been run over by several buses (plus a couple of big rigs), and I’m pretty sure I saw Ben Bernanke give me a shove just before I got hit.

I don’t think I’ll read any more Bernanke posts.

At my age, it’s not good for my blood pressure.

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Comments (4)
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4 Existing Comments
  1. James K said:
    on April 1st at 09:18 am

    If the Feds or anyone was really concerned about the economy then the (perceived on their part) oversight/concern of increase in wages would be coupled with interest rates, i.e. labor focus is wages and financial focus is interest rates. The “second leg” to this equation is lacking and the role of seniors in the marketplace (wanting increased interest rates) is wanting. At the end of the day the “buck stops with the Fed.” It is not looking at the long term impact on seniors (or others for that matter that relies on interest rate income) but seemingly in more focused on continuing to coddle to the speculators as “purportedly being in the best interest of the economy.” Get real, the speculators created the problems for the economy not the seniors! Leadership is expensive and the Fed does not get it now but did in 2008 up to a couple of years ago. But the voters get what they want!

  2. A.Bundy said:
    on April 1st at 02:55 pm

    if webster had a definition of human scum, his picture would be right there. the interest rate should be at least 10% yet we are still stuck around zero thanks to this buffoon.

  3. Gene Boley said:
    on April 2nd at 09:10 am

    The low interest rate has deeply hurt my community, I live in Sun City and although we are not poor we have only our investment income to pay our bills. Most seniors my age don’t really trust the stock market because we were raise in poor times. We invested in CD’s They are federal insured. Now we only have that to live on. Ben, I bet you are not living on CD income. Come join us under the bus

  4. Eli Wurth said:
    on April 2nd at 11:00 am

    Big Ben’s flawed circular logic doesn’t factor in a couple of very important facts – that higher returns on CDs would create more consumer capital, along with greater consumer confidence, hence helping the economy to recover sooner. There’s every reason to believe that the Great Recession was exacerbated, not alleviated, by this low rate policy.