Crisis illustrates power of the unelected

Supplying a note of dissenting populism was famed investor Jimmy Rogers who put it bluntly in an interview with Bloomberg News Monday, calling it “outrageous that the Federal Reserve is just throwing the dollar out of the window…. They are driving the dollar down. They are printing money as fast as they can.”

He added, acerbically, “This man Bernanke was never elected by anybody. I don’t know where he gets the audacity to spend $230 billion of our money to bail out a few friends on Wall Street. This is totally outrageous…. Who gave him the authority to do that, to destroy the dollar ….? And nobody ever voted for the man.”

Who voted for Bernanke?
That is not quite true. In January of 2006 the Senate did vote unanimously by voice vote to hand the Fed chairman’s job to Bernanke.

Former Federal Reserve vice chairman Alan Blinder noted in a column in the New York Times on the day after Bernanke’s confirmation hearing in November of 2005 that “these are pretty placid times for the nation's central bank.”

Blinder noted how different the situation was 1979 when Paul Volcker was up for Senate confirmation as Fed chairman. “High inflation had plagued the country for years and was about to get worse…. So the Federal Reserve's monetary policy claimed the public's and the news media's attention,” Blinder said.

But in 2005, he explained, “The happy truth is that monetary policy is not very controversial — and is certainly not very political — these days.”

There was, however, one harsh dissenter at the Bernanke love feast in 2005, a senator whose criticism now seems almost prophetic.

Bunning foresaw trouble in 2005
Sen. Jim Bunning, R-Ky., a member of both the Banking and Finance committees, said “I oppose Dr. Bernanke because he says he will continue the policies of Chairman Greenspan. That does not sit well with me.”

Bunning blamed Greenspan for allowing “creation of a fat market bubble that ultimately popped. Then there was a housing bubble. It led to an unbalanced economic recovery fueled by cash raised from soaring home prices. This resulted in record household debt and negative consumer savings rates.”

Bunning also denounced “the endless bailouts of Chairman Greenspan. There was the 1997 Fed bailout of the Asian crisis. There was the Long Term Capital Management bailout in 1998. We had a financial crisis and the Fed got involved with Mexico and all this led to a huge trade and Federal budget deficits.”

He concluded gloomily, “Chairman Greenspan leaves knowing that his mess will fall to his apprentice, Ben Bernanke. I hope there is no damaging recession or financial crisis looming. If so, I hope Ben Bernanke does not live up to his nickname of ‘Helicopter Ben,’ and throw the U.S. mint's printing presses into overdrive.”

If you believe Rogers, Bunning’s prophecy is coming true.

But if you believe Dodd, Schumer and McCain, Bernanke may well be the hero of the moment.

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