Bernacke

=aPRIL 18, 2020<a href="https://www.c-span.org/video/?471049-1/firefighting" class="title" style="margin: 0px 0px 5px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; line-height: 1.5em; vertical-align: baseline; transition: color 0.35s ease 0s; outline: 0px; text-decoration-line: none; width: 194.391px; float: left; min-width: auto; background-color: rgb(255, 255, 255);" /><h3 style="margin: 0px; padding: 0px; border: 0px; font-variant: inherit; font-weight: 400; font-stretch: inherit; line-height: 1.1em; vertical-align: baseline; -webkit-font-smoothing: antialiased; transition: color 0.35s ease 0s;"><a href="https://www.c-span.org/video/?471049-1/firefighting" class="title" style="margin: 0px 0px 5px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; line-height: 1.5em; vertical-align: baseline; transition: color 0.35s ease 0s; outline: 0px; text-decoration-line: none; width: 194.391px; float: left; min-width: auto; background-color: rgb(255, 255, 255);">Firefighting</a></h3><p style="margin: 0px 0px 10px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; line-height: 1.2em; vertical-align: baseline; background-color: rgb(255, 255, 255);">Former Federal Reserve Chair Ben Bernanke, who played a central role in the handling of the 2008 financial crisis,…
<a href="https://www.alternet.org/economy/one-global-finances-biggest-doctors-warns-world-economy-about-get-very-sick">https://www.alternet.org/economy/one-global-finances-biggest-doctors-warns-world-economy-about-get-very-sick</a>When Claudio Borio speaks, the big bankers and investors, the economics profession, and senior policymakers listen quite carefully—even if his sentiments don’t reach the shores of the popular media. Borio, the chief economist for the Bank for International Settlements (BIS), the central bankers’ central bank, recently remarked on the fragility of the global economy, and suggested that we were <a href="https://www.france24.com/en/20180923-bis-warns-global-economy-risks-crisis-relapse" style="text-decoration-line: none;">on the verge of a significant relapse</a> similar to the global crash experienced 10 years ago. Among the parallels <a href="https://www.france24.com/en/20180923-bis-warns-global-economy-risks-crisis-relapse" style="text-decoration-line: none;">he perceives</a>: the proliferation of “collateralized loan obligations (CLOs), which are ‘close cousins’ of the infamous instruments known as collateralized debt obligations, or CDOs, and securities backed by residential mortgages,” the prevalence of which helped to crater the credit system in 2008.<p dir="ltr" style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; line-height: 32px !important;">Mindful as central bankers have been about the ready availability of liquidity, they have (<a href="https://www.atimes.com/central-bankers-as-dealers-of-last-resort/" style="background-color: rgb(255, 255, 255); text-decoration-line: none;">as I have written before</a>) omitted to “proactively... [charging] private market participants variable risk premiums commensurate with the risk of the underlying activity they are undertaking when providing credit.” Furthermore, Borio implies that the monetary and fiscal authorities expended excessive efforts toward restoring the status quo ante, instead of directing policy toward broader job creation and income generation, which would place the economy on sounder footing when the next downturn inevitably comes. Finally, the BIS’s chief economist also publicly mooted whether additional “medicine” of the kind that we used last time will be in sufficient supply to respond adequately when the next crisis emerges.<p dir="ltr" style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; background-color: rgb(255, 255, 255); line-height: 32px !important;">So is Dr. Borio correct in both his diagnosis and concomitant concern about the lack of readily available cures for the prevailing illness? And are there any key omissions in his analysis that could help to mitigate the inevitable relapse that he forecasts?<div style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; background-color: rgb(255, 255, 255); margin-bottom: 20px;"><p dir="ltr" style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; background-color: rgb(255, 255, 255); line-height: 32px !important;">Borio has a good track record in terms of forecasting economic crises. <a href="https://ideas.repec.org/p/bis/biswps/216.html" style="text-decoration-line: none;">As early as 2006</a>, he was presciently warning about the risks to the economic upturn posed “by the unwinding of financial imbalances that occasionally build up over the longer expansion phases of the economy,” in marked contrast to most experts at that time, who often sounded <a href="https://en.wiktionary.org/wiki/Pollyannaish#English" style="text-decoration-line: none;">Pollyannaish</a> in comparison.<p dir="ltr" style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; line-height: 32px !important;">To be sure, there are ample grounds for Borio’s caution. He correctly observes the revival of many of the speculative instruments that created so many problems back in 2008, even as policy officials <a href="https://www.france24.com/en/20180923-bis-warns-global-economy-risks-crisis-relapse" style="text-decoration-line: none;">continued</a> to “administer... ‘powerful medicine’ to counter the effects of the crisis, with ‘unusually and persistently low interest rates.’” Paradoxically, the cure was almost as bad as the disease, given how aggressive monetary ease helped bring these instruments back from near death.<p dir="ltr" style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; background-color: rgb(255, 255, 255); line-height: 32px !important;">There is no question that in a world dominated by high and persistent levels of debt (particularly private debt), low interest rates helped to reduce the crushing burden for borrowers. But to extend the medical analogy, using interest rates to cure a global debt deflation is akin to using a sledgehammer during surgery, rather than a scalpel. There are diffuse outcomes for the cure. For every borrower aided by lower rates, there are savers (pensioners, et al) who have been adversely impacted by the prevailing low interest rate structure. Savers secure less income from minimal interest rates on their assets. Recall that when the government runs deficits, it is a large net payer of interest on its outstanding debt.<p dir="ltr" style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; background-color: rgb(255, 255, 255); line-height: 32px !important;">There are also supply-side issues: Low interest rates actually exacerbate prevailing deflationary trends, because the corresponding reduction in the cost of capital reduces the threshold to turn a profit, which in turn can induce greater supply and production. In addition, under a low interest rate environment, the cost of holding inventory is very low, which may mitigate the possibility of supply bottlenecks, but also potentially creates oversupply.<p dir="ltr" style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; background-color: rgb(255, 255, 255); line-height: 32px !important;">Raising or lowering interest rates to affect demand is therefore less effective than fiscal spending. Government spending directly targets demand deficiencies, and net injections of government stimulus into an economy can override the impact of interest rate manipulation.<p dir="ltr" style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; background-color: rgb(255, 255, 255); line-height: 32px !important;">No less an authority than former Federal Reserve Chairman Ben Bernanke has indirectly confirmed this claim. <a href="https://www.princeton.edu/_{pkrugman/bernanke_paralysis.pdf}" style="text-decoration-line: none;">In a paper dated from 2000</a>, then-Professor Bernanke made the claim that, in a deflationary environment (which he was discussing at that time in the context of Japan), monetary policy could be effective to the degree that it retained “fiscal components.” He fretted that as interest rates plunged close to zero in the face of rising deflationary pressures, any income derived via the interest rate channel would be dissipated. That is why he advocated having the monetary and fiscal authorities working closely in harness to ensure that deflation was beaten.<p dir="ltr" style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; background-color: rgb(255, 255, 255); line-height: 32px !important;">Which raises the question that Borio doesn’t really answer directly: If central banks continue to wean their respective economies off low interest rates, is it inevitable that the economy will suffer a relapse? Surely, government spending and taxation decisions (which are among the first policy levers used to deal with recessions) could offset this impact, because they more directly affect demand and, if deployed aggressively enough, can offset any negative impact derived as central banks raise rates. This would imply that Claudio Borio’s implicit concerns about the withdrawal of the “low interest rate medicine” would in and of themselves overstate the problem with said interest rates rise (as they are today).<p dir="ltr" style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; background-color: rgb(255, 255, 255); line-height: 32px !important;">The more germane consideration that goes to the heart of Borio’s concerns (i.e., that we have run out of policy space) is how best to address a future economic relapse. Being a central banker, it is understandable that Borio places emphasis on monetary policy. But is fiscal policy subject to the same kinds of limits? Have governments have run out of fiscal policy options as a result of the measures undertaken in 2008 and the corresponding rise in public debt levels (as much private debt was “socialized”—i.e., taken on the balance sheets of governments to pay for bailouts and the like)?<p dir="ltr" style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; background-color: rgb(255, 255, 255); line-height: 32px !important;">Again, let us refer back to Ben Bernanke. <a href="https://www.federalreserve.gov/boarddocs/speeches/2002/20021121/" style="text-decoration-line: none;">In a now famous 2002 speech before the National Economists Club,</a> he argued the following:<blockquote style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; background-color: rgb(255, 255, 255);">“Under a fiat (that is, paper) money system, a government (in practice, the central bank in cooperation with other agencies) should always be able to generate increased nominal spending and inflation, even when the short-term nominal interest rate is at zero. ... The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”</blockquote><p dir="ltr" style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; line-height: 32px !important;">This statement has often been misinterpreted as implying that <a href="https://www.forbes.com/sites/johntamny/2017/09/24/forget-the-protests-of-conservatives-deficits-really-dont-matter/#47c759983707" style="text-decoration-line: none;">deficits don’t matter</a>, and Bernanke himself was often savaged for his advocacy of “helicopter money.” But his NEC speech simply states the obvious: namely that in the absence of some sort of external constraint (whether a gold standard, or borrowing in a foreign currency), a government with a free-floating fiat currency always has the financial capacity to spend. However, it does face real resource constraints, which can render its activities inflationary—for example, if, <a href="https://rooseveltinstitute.org/deficits-do-matter-not-way-you-think/" style="background-color: rgb(255, 255, 255); text-decoration-line: none;">as Professor Randy Wray has argued</a>, “the economy runs up against a full employment constraint, but government stubbornly keeps spending more.” Although, <a href="https://rooseveltinstitute.org/deficits-do-matter-not-way-you-think/" style="background-color: rgb(255, 255, 255); text-decoration-line: none;">as Wray notes</a>, “The last time the US approached such a situation was in the over-full employment economy of WWII. Rather than bidding for resources against the private sector, the government adopted price controls, rationing, and patriotic savings. In that way, it kept inflation low, ran the budget deficit up to 25% of GDP, and stuffed banks and households full of safe sovereign debt.”<p dir="ltr" style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; background-color: rgb(255, 255, 255); line-height: 32px !important;">The point is that any policy limits that would impede our ability to respond to Borio’s feared economic relapse are largely political in nature. A necessary foundation of economic stabilization policy means that policymakers must be ready, willing and able to employ policy buffers that are large enough to do the job, and not simply operate with some preconceived notion of “financial sustainability.” At the same time, can policymakers undertake aggressive fiscal measures without re-igniting yet another bubble in the most puffed-up dimension of the economy— the figure-eight of CLOs/CDOs issued, sold and traded and the corresponding insurance products sold against them? And can they find a way to slowly let that air out of the bag without creating a full-blown discontinuity?<p dir="ltr" style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; background-color: rgb(255, 255, 255); line-height: 32px !important;">Beyond that, a genuinely effective policy is one that not only boosts spending if and when the economy collapses, but also expediently improves the income and employment condition of those at the very bottom of the income distribution. Historically, this hasn’t been done well. As Professor Pavlina Tcherneva <a href="https://www.levyinstitute.org/pubs/wp_772.pdf" style="text-decoration-line: none;">has illustrated</a>, “Only during the 1950-53 expansion did the bottom 90% capture all of the average income growth in the economy. Since then, the top 10% of households have been capturing greater and greater share of the income growth and, in the first two expansions of the 21st century, they have captured all of the income growth.”<p dir="ltr" style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; background-color: rgb(255, 255, 255); line-height: 32px !important;">Tcherneva’s analysis explains why the fiscal initiatives undertaken by Bush, Obama and Trump administrations, respectively, have been comparatively muted in terms of impacting the broadest swaths of the U.S. economy. Aside from the obvious morality question, growing inequality generally causes an economy to work at less than optimal efficiency, which makes sense intuitively in that it becomes increasingly difficult to grow an economy rapidly if the bulk of the gains are increasingly funneled to a smaller and smaller number of people (especially if they have the highest savings propensities).<p dir="ltr" style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; background-color: rgb(255, 255, 255); line-height: 32px !important;">In addition to the inefficiencies brought about by growing inequality, fiscal policy has tended to be biased toward “trickle-down economics” in which the benefits of government spending/taxation decisions “trickle down” to the population as a means of stimulating employment and income gains, as opposed to focusing directly on programs that cover “labor gaps” through direct employment programs such as the <a href="https://www.levyinstitute.org/pubs/wp_902.pdf" style="text-decoration-line: none;">Job Guarantee</a> (JG). The virtue of the JG, as the economist Hyman Minsky <a href="https://www.jstor.org/stable/1237545?seq=1#page_scan_tab_contents" style="text-decoration-line: none;">argued</a>, is that “instead of the demand for low wage workers trickling down from the demand for the high wage workers, [policy orientation] should result in increments of demand for present high wage workers ‘bubbling up’ from the demand for low wage workers.” This can be better achieved via the JG, than, say, tax cuts.<p style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; background-color: rgb(255, 255, 255); line-height: 32px !important;">Above all else, we need to avoid monetary machinations and central bank overreach, which simply move to restore the economy to an unsustainable status quo ante. Policymakers must also embrace fiscal initiatives that reorient policy away from demand-side trickle-down measures and toward a bottom-up approach that is based on employment and reducing inequality. Absent these considerations, Claudio Borio’s <a href="https://www.france24.com/en/20180923-bis-warns-global-economy-risks-crisis-relapse" style="text-decoration-line: none;">concerns will be validated</a>: The economy’s recovery will be uneven, and the convalescence, such that it is, will be lengthy, intermittent, and maintaining many of the same pathologies that our economy displays today.<p style="font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; margin: 0px 0px 22px; background-color: rgb(255, 255, 255); line-height: 32px !important;">This article was produced by the <a href="https://independentmediainstitute.org/" style="text-decoration-line: none;">Independent Media Institute</a>.<div style="">=</div>

JHNot only has the Wall Street bailout restored the banksters who wrecked our economy to full prosperity, it's also paying off very handsomely for the bank overseers who orchestrated the bailout.For example, as chairman of the Federal Reserve for six years, Ben Bernanke led the bucket brigade that poured trillions of public dollars into Wall Street's vaults. So, he's now on a global "Show Me Some Love" tour, pocketing up to $400,000 for each speech he delivers to the financial giants he rescued with our money.Then there's Timmy Geithner, whose chief responsibility as head of the New York Fed had been to regulate Wall Street's reckless banks so their greed wouldn't cause a nationwide financial crisis. But – oops! – they did exactly that on Timmy's see-no-evil watch. Still, having proven himself a banker's man, Geithner was promoted to be President Obama's Treasury Secretary. There, he insisted that the government's priority must be rescuing greedy bankers with taxpayer dollars, rather than saving the millions of American homeowners stuck with bloated mortgages, facing wage cuts and joblessness, and who were sinking into deep debt and poverty.But, being a banker's man, Geithner was not punished for his inept and morally-deplorable policies. Rather, he was richly rewarded with a top executive position as – what else? – a Wall Street banker. Now, he has published a book about his years of public screw-ups. Oh... sorry, I meant "public service." Concluding that he was correct and courageous, Geithner's book should've been titled: Heckuva Job, Timmy!This is Jim Hightower saying… So Wall Street prospers, Ben and Tim wallow in wealth – and the real economy remains mired in the ditch of joblessness, low wages, household debt… and rising anger at the Wall Street/Washington cabal of self-serving elites who shoved them into that ditch."Springtime for Bankers," http://www.nytimes.com/2014/05/19/opinion/krugman-springtime-for-bankers.html, May 19, 2014."Crisis Management, Rethought," The New York Times, May 18, 2014.

update; <a href="http://jimhightower.com/node/8347#.U4jAsPldWfg">http://jimhightower.com/node/8347#.U4jAsPldWfg</a>

<h1 property="dc:title" datatype="" class="node-title">All Aboard the Global Gazillionaire Gravy Train!</h1>

</div>

If Janet Yellen is to convince the American people that the Fed is on their side, she's got her work cut out for her.

According to a 2013 Gallup poll, Americans' <a href="http://www.gallup.com/poll/162764/americans-views-irs-sharply-negative-2009.aspx" style="">disgust for the Federal Reserve</a> [3] ranked just above the IRS among federal agencies. That's a lot of hate, people.

And it's easy to see why.

In recent memory, we've had Alan Greenspan, proponent of economic quackery, Wall Street casinos, and an Ayn Rand acolyte. The subprime mortgage disaster came right after Greenspan left office, and as the documentary<a href="http://en.wikipedia.org/wiki/Inside_Job_%28film%29" style="">Inside Job</a> [4] pointed out, Big Al bears big responsibility for the meltdown. (<a href="http://en.wikipedia.org/wiki/Time_Magazine" style="">Time magazine</a> [5] named him one of the "25 People to Blame for the Financial Crisis.”) And just before Yellen we had Ben Bernanke, who prioritized holding down inflation over putting Americans back to work, one of the reasons Wall Street is enjoying record profits, while <a href="http://data.bls.gov/timeseries/LNS14000000" style="">6.3 percent of Americans</a> [6] remain unable to find a job.

But Ben Bernanke would like to stick another fork in your eye. A diamond-studded fork.

According to the New York Times' Alexandra Stevenson, Bernanke had barely left his office when <a href="http://dealbook.nytimes.com/2014/05/20/after-fed-bernanke-offers-his-wisdom-for-a-big-fee/?php=true&type=blogs&_r=0" style="">he jumped aboard the global gazillionaire gravy train</a> [7]:

"On Tuesday, Ben S. Bernanke spoke in Abu Dhabi; on Wednesday, he was in Johannesburg. By Friday, he was in Houston. That week in March was a particularly busy one for Mr. Bernanke ... During his eight years as steward of the world's largest economy, Mr. Bernanke's salary was about $200,000 a year. Now he makes that in just a few hours speaking to bankers, hedge fund billionaires and leaders of industry. This year alone, he is poised to make millions of dollars from speaking engagements.

Mr. Bernanke is following a well-trodden path that his predecessor, Alan S. Greenspan, and other Washington policy makers have taken. ... Mr. Bernanke has agreed to speak with a Middle Eastern bank, private equity firms and trade associations, as well as at investment bank get-togethers, charging his hosts fees that range from $200,000 in the United States and $400,000 for engagements in Asia. While he has dined with hedge fund managers at small events arranged by investment and brokerage firms including JPMorgan Chase, some Wall Street firms have balked at the high fees."

</blockquote>

Is Wall Street paying back a friend for favors? You be the judge....

The nation’s central bank, born in 1913, serves as one of the two great levers of our economy, the other being the Treasury. It sets interest rates that affect how much it costs everybody to borrow money. The Fed controls the nation's money supply by buying and selling U.S. treasury securities, and can use monetary policy to spur growth or diffuse inflationary pressures. Part of the Fed’s job is to move the country toward full employment, and it plays a major role in writing of financial rules.

Obviously, if Americans are ever to fully recover from the Great Recession and decades of bad economic policy, we need a Federal Reserve that doesn't play footsie with Wall Street. 

Marriner S. Eccles proved that this is possible. Eccles, who served from 1934- '48 under Roosevelt, often gets credit for having saved capitalism from itself. He fought for FDIC insurance on bank deposits, higher income and inheritance taxes on the 1 percent (hello!!!), and other policies to combat inequality. He backed federal regulation of child labor, unemployment insurance, financial reform, Social Security and policies that helped stabilize the economy and create the robust middle-class that once thrived in America. <a href="http://londonbanker.blogspot.com/2011/09/testimony-of-marriner-eccles-to.html" style="">In his historic testimony to the Senate in 1933</a> [8], just before he became Fed chair, he took a hard swing at the wealthy:

“It is for the interests of the well to do—to protect them from the results of their own folly—that we should take from them a sufficient amount of their surplus to enable consumers to consume and business to operate at a profit. This is not 'soaking the rich,' it is saving the rich. Incidentally, it is the only way to assure them the serenity and security which they do not have at the present moment.”

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Janet Yellen has said nothing so strong as this, but there's evidence she has some sympathy for Americans who are unemployed (unemployment is one of her research specialties). She has also said <a href="http://money.cnn.com/2014/03/31/news/economy/janet-yellen-raise/" style="">point blank</a> [9] that the Fed's job is to help Main Street, not Wall Street. And she has recently signaled that she supports the nomination of a community banker to the Fed, which would be a positive development.

Let's hope she'll chart a different course from her recent predecessors.

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