On Wednesday, Federal Reserve Chairman Ben Bernanke will go in front of the microphones for the first of his newly instituted quarterly press conferences.
He will be asked about $4-a-gallon gas, shrinking cereal boxes, mounting government debt and, probably, the Fed’s penchant for secrecy.
But Bernanke’s views are anything but secret. They’ve been aired regularly through his testimony before Congress, his frequent speeches, and his interviews on programs like “60 Minutes” - and the Fed chief routinely answers skeptical questions.
His critics, in contrast, get to blast away from the cheap seats, and their complaints are rarely fact-checked, much less challenged.
When are we going to get Jim Bunning, Ron Paul, Rand Paul, and Rick Santelli up on a dais to address some of the illogic in their claims? And what might that press conference sound like?
Let’s use our powers of imagination to find out:
- Q: Senator, you claim to support free markets. Yet the dollar has been artificially propped up for years by China and many other U.S. trading partners. If the free markets demand a lower dollar to unwind the huge trade and investment imbalances that have accumulated over the years, why are you blaming the Fed instead of the economic realities?
- Follow-up: Do you think a dollar ought to be worth the same no matter how many of them China piles up?
- Follow-up: Do you think the imbalances will disappear on their own?
- Follow-up: Or do you think 9% unemployment and a trade deficit at 4% of GDP are evidence that everything is hunky-dory?
- Q: Congressman, in your April 15 New Hampshire speech, you explicitly linked excessive U.S. borrowing and spending to foreigners’ accumulation of U.S. dollars. What makes you think that propping up the dollar won’t perpetuate these trends, pushing America ever deeper into debt?
- Q: Senator, as you may or may not have heard, America’s disproportionate share of the global economy has been shrinking gradually for decades, from close to half of the whole enchilada right after World War II to something closer to 20% today - which is still four times our share of the global population. As the rest of the world catches up to our levels of wealth and productivity, how do you expect that growing affluence to be expressed?
- Follow-up: Isn’t it possible, even likely, that those wealthier foreigners want more corn, copper and crude than ever before, and that this is what’s driving up the price of commodities?
- Q: Rick, for two years you’ve prophesied calamity if the Federal Reserve pursued its policies, yet the economy is plainly recovering. If you can’t admit now that you were wrong to sow panic in 2009, how can we now believe anything you say?
It’s just as well that no one but me is clamoring to grill the rabble-rousers - the reason is that they’re not, as yet, in power. But they’re being intellectually dishonest in failing to address the effect of growth in emerging markets on the prices of commodities, and the effect of the dollar’s status as reserve currency on the U.S. job market.
All those greenbacks stuffed under mattresses and inside the central bank vaults would have driven down the dollar long ago had they been recycled in a timely fashion. Instead, the dollar was propped up even as jobs and investment flowed elsewhere.
So now 19% of the population is underemployed, and a much smaller (but wealthier and noisier) minority is sweating dollar devaluation. But there are worse things than a little inflation - and a permanent underclass denied the chance to earn a paycheck is one.
The people with assets to worry about benefited hugely, on the whole, from the outsourcing of jobs abroad and the flood of cheap imports that headed the other way as a result. That’s fine.
But the free-market consequence of those processes is a weaker dollar. Those who got most of the cheese shouldn’t whine.