Thursday, February 02, 2006

 

"Helicopter" Ben Bernanke

Ben Bernanke is about to take over as Chairman of the Federal Reserve. As a Fed Governor, Bernanke famously said that a solution to deflation would be to toss money out of helicopters. Assuming his tongue was firmly planted in his cheek he will learn that as Fed Chairman everything he says has the potential to roil the markets. Let's hope he learns that lesson soon.

You might remember that the crash of '87 was not long after Alan Greenspan took over at the Fed. Undoubtedly changing horses in the never ending race to monetary stability will make 2006 an interesting year in the markets. In part I feel sorry for Bernanke. There are enormous imbalances in the US economy and if things head south Bernanke will catch the blame that Greenspan deserves. OTOH, Bernanke seems as clueless, or in denial, as Greenspan. Of course, he probably would not have gotten the job were it not for his ability to parrot the "everything is just peachy" mindset.

Bill Fleckenstein fisks Easy Al's self serving speech. I have a feeling Greenspan will play Jeff Skilling to Bernanke's Ken Lay.

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