[quote=SK in CV][quote=livinincali][quote=FlyerInHi][quote=SK in CV]Just for a different perspective, I think he’s done an absolutely masterful job the last 5 years keeping the economy afloat. And continues to do so, despite the lack of support of legislators.[/quote]
That’s exactly it.
Fiscal policy has actually been very counter productive.
Bernanke did quite well with the monetary tools at his disposal.[/quote]
Nobody thought Greenspan’s low interest rates policies in 2003-2006 to deal with the dot bomb were bad either at the time. It wasn’t until after the housing bubble blew up, that we looked back and said that was kind of dumb. I figure this time will be no different. When Bernanke’s successor is forced to deal with the fed’s bloated balance sheet they’ll look to point the figure at Bernanke’s stupid policies of the time. “If Bernanke wasn’t so focused on the short term we wouldn’t have to be dealing with this mess,” will be the catch phrase 5 years done the line if not sooner.[/quote]
I don’t think those who think that low interest rates were the main problem from 2003-2006 have a clue what they’re talking about. It wasn’t the interest rates, the genesis was the almost non-existent lending standards.[/quote]
Agree with livin’ on this. The low rates were a big part of what caused the non-existent lending standards as investors (including pension funds!) kept reaching for greater yield. The Fed’s easy-money policies are largely responsible for the problems with the public pension funds. Bernanke and Greenspan are FAR more responsible for the problems with the pension funds (and healthcare costs due to inflation???) than the public workers are.
It’s happening now, too, but not WRT lending. When 30-40% of the housing purchases are made by investors with 100% cash, it is NOT a “normal” market. When the costs of basic necessities are going up while wages stagnate or go down, that is NOT indicative of a healthy economy. When the 1% sees their wealth double and triple while the working people continue to struggle more each year, it does NOT mean that the Fed is “doing a good job.”
We needed asset price deflation and defaults to go through on all of the loans that were made without regard to underwriting standards. That was the only way to wash out all of the excesses, and it would have gone a long way toward reducing the huge, and growing, wealth/income gap that has plagued our nation (and is also largely behind the stagnation of our economy, IMHO).
The Fed has totally screwed everyone who lives on a fixed income, and that includes all of the people who have diligently saved for decades and those who have to work for a living. He’s done this to save the wealthy capitalists who spend their time looking for ways to pillage public assets and cash flows, and lobbying for more ways to avoid paying taxes for the social, legal, physical, and educational infrastructure that make their success possible.
