No Comment Necessary
Posted by Joshua Claybourn on 26 July 2009 | 9 responses
9 Responses to “No Comment Necessary”
You say “no comment necessary”, but I’m not sure what you take the obvious take-home message to be here.
I agree with philosopher. It is not clear if you think the congressman, the chairman, or both are ridiculous.
Quite frankly, I don’t know nearly enough about monetary policy to determine whether the Congressman’s criticism is valid. I do know that a couple of his questions were rather unfair–for instance, expecting Bernanke to know off the top of his head the 14 nations which borrowed dollars since 2007, or the date when the Federal Reserve Act was passed (or whatever amendment empowered the Fed to lend dollars to other nations). And then that last bit about the entire GDP of the United States at its founding being less than half a trillion dollars–so what?
Bernanke is a tool. I so hope HR 1207 and S 604 pass.
Fair enough. I intended to highlight what I thought was an interesting exchange, hence the lack of additional comments. But, for what it’s worth, I am sympathetic to the Congressman.
Congressman Gray seemed to me to be fishing for something to stick to Bernanke while Bernanke struck me as being quite reasonable. For example, the Congressman tried to suggest that loaning U.S. Dollars to foreign central banks was somehow tied to the dollar rising in value by 20%. I’ll guess that he wanted to give the impression that Fed policy was pricing U.S. exports out of foreign markets (or making imports cheaper) to the detriment of U.S. workers. Bernanke’s response that the contemporaneous rise in the dollar’s value was a coincidence seems right to me. Why would we expect loaning $500,000,000 to other Central Banks, who turned around and loaned the money to financial institutions within their jurisdiction, to result in an increase in the value of the dollar? Given the fed was just holding the returning Euro, Canadian and NZ dollars, the exact opposite result would seem more reasonable.
I would further guess that the loans related to financing for international trade, which is the usual reason for lending in U.S. dollars on international markets. Japan uses dollars to buy oil, not yen. Financing for international trade has been under considerable pressure due to recent and current problems with financial institutions. The ready availability of U.S. dollars to finance international trade was just one of the critical problems facing the Fed and essential to keeping people at work. That New Zealand, to cite one of the Congressman’s examples, would need $3000 per person to support its international trade situation doesn’t strike me as being at all unreasonable.
Bernanke and Grayson represent two sides of our economic travails. Bernanke wants to prop up banks with fiat money rather than address root issues. Grayson, as revealed by the Economy & Jobs page on his official website, is a fiscal moron who thinks the nation can expand entitlement spending and remain solvent, and who pays not one iota of attention to trying to reduce the cost of doing business in America.
Re: HR 1207 and S 604
You know we live in strange times when Ron Paul and Bernie Sanders are on the same page. (Their bills look okay to me, too.)
I concur with Paul.