Bernanke gives us just what we need from him – nothing.
August 26, 2011 – The gold bullion price had some serious jitters awaiting Bernanke’s speech this morning, as was expected. As the time drew near it plunged nearly $25, but within 45 minutes of his first words the price skyrocketed towards $1800. What earth shaking things did the chairman have to say?
“The Committee will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate to promote a stronger economic recovery in a context of price stability.” I confess, I didn’t see that one coming. And Bernanke turned up the heat on his year-old campaign to coerce Congress into doing its job saying that Fed policy has little long-term influence on the economy. The Fed doing the absolutely right thing for once – nothing. At least until they hold a special two-day meeting in mid-September.
Of course Mr. Chairman couldn’t keep himself from understating the problem for the American people, but I don’t think there’s very many left who would agree that the “recovery” has been “modest,” or be assured when told that “the growth fundamentals of the United States do not appear to have been permanently altered.”
What gave gold a shot in the arm this morning was the absence of even a hint of QE3. But that quickly wore off, and now we can expect a bumpy ride as everyone tries to read something into a speech that said little more than “We’re tired. Leave us alone. Go bother Congress.”
We should do that. Given a little time to reflect the Fed might rethink its business model. Bernanke might realize that the function of a central bank is not to micromanage the economy, that it can’t fix unemployment and it has absolutely no business mucking about in the markets. And seeing that the Fed has failed in its overarching mandate to protect the currency, maybe they will wind down the corporation altogether.
