The Federal Reserve – Printing more Money???

For the past 30 years, the Federal Reserve has been lead by only three individuals:

• Paul A. Volcher 1979 – 1987 (1981 recession)
• Alan Greenspan 1987 – 2006 (1991 & 2001 recessions)
• Ben Bernanke 2006 - ? (the 2008 Great recession)

How would you rate their performances?

 

I remember the 1981 recession very well. You had to buy your home with a credit card with the high interest rate of 18%! We watched the Fed’s action every month to see if the interest rates would be lowered. We probably refinanced three times during that period of time.

  

The 1991 recession was triggered by the Savings and Loan failures. All of the toxic real estate assets were bundled into the newly formed RTC - which worked very well.

  

Since 1979, we have had six Presidents – three Democrats and three Republicans! We know everything about the President’s but know very little about the role of the Federal Reserve Chairman. Yes, they are confirmed by Congress but you would think that “fresh” ideas can be generated from more people.

  

Now today, Ben Bernanke is in favor of generating actions to cause inflation to rise. His thought process is that increasing inflation will cause more people to buy and companies to expand. With inflation come higher interest rates which have always been a benchmark for people to buy. Also companies may borrow, hire more workers, and make more goods if the interest rates start to increase.

  

I am not sure how this will work but let’s think about it for one second!

  

The Federal Reserve will print more money to trigger this action!

 

With higher inflation due to Fed policies, how can they control the outcome? I don’t think they can and we may have a gradual increase in inflation for years to come.

  

With interest rates at already historic lows and no one is buying or expanding, will interest rates moving up to 5% or even 6% cause people to reevaluate their options?

 

Maybe this will help in the short term but not in the long term. This is a political move not an economic decision. Increasing inflationary pressures and having higher interest rates will not make us feel better nor cause us to have greater confidence in the economy. Triggering inflation and delaying foreclosures going into the holiday season just doesn’t sound right. Does it? Just how does this anticipated action by the Fed help the unemployed?

 

It just seems to me that the Federal Reserve has enormous power influenced by politics. They take actions without expert oversight, have stagnant leadership, and have apparent arrogance.

  

Bernanke is supposed to be the expert on the Great depression

Volcher is working on the Obama team and

Greenspan voices his opinions almost weekly.

  

Isn’t it time to try something different or ask someone else for opinions? I am sure there are qualified people willing to bring new ideas to the table ……………don’t you think??????