Sunday, January 24, 2010

Populism Rising Against Bernanke

There is so much populist rage against Wall Street, that Ben Bernanke's confirmation -- once thought to be a foregone conclusion -- is now in jeopardy.

Senators of all stripes have publicly stated that they will vote against Bernanke. These include Independent Bernie Sanders, Democrats Russ Feingold, Barbara Boxex, and Byron Dorgan, plus Republicans Richard Shelby, David Vitter, Jim Bunning, John Cornyn, and Jim DeMint.

All told, at least 17 senators have indicated they'll vote against Bernanke, according to Reuters.

It seems that Scott Brown's victory this week has senators fearing a backlash, and consequently no Senate seat is deemed safe this fall.

Simply opposing President Obama may be the motivation of the Republicans. But many senators may seek to appear allied with ordinary Americans disgusted with Wall Street's greed and manipulation.

No Fed chairman has been rejected by the Senate. Sixteen senators opposed Paul Volcker in 1983, the most "no" votes ever cast against a Fed chairman. He was eventually confirmed by a vote of 84-16.

But more Americans than ever are dubious about the Fed's role, its intentions, and whether it really cares about the interests of the American people.

A recent poll found that 47 percent of Americans think Bernanke cares more about Wall Street than Main Street, while only 20 percent think he works for Main Street. Independents, who swung heavily for Brown in Massachusetts, are even more opposed to Bernanke than Democrats or Republicans. Fifty percent of independents think he cares first about Wall Street; 15 percent think he prioritizes the needs of Main Street.

The rising tide of voter rage may result in a growing sense populism in Washington.

But the Fed's spin machine is working hard to spread fear of a double-dip recession, and a stock market collapse, should Bernanke be defeated.

The amount of fear-mongering being spewed is remarkable. As the spin goes, if Bernanke goes down businesses will cut spending and investing, and stop hiring. Higher interest rates and inflation will follow. Uncertainty, anxiety, and shaken confidence will spread like a contagion.

Oh, the humanity!

The casual observer will contend that all of those things are already happening. And an informed observer knows that they will continue to do so, regardless of Bernanke's eventual fate.

Don't believe the hype.

The Fed is the root of our economic problems. It has continually created the bubbles and abysmally failed in its mission to control inflation, maintain full employment, and successfully manage both credit and interest rates, which are continually manipulated with devastating consequences.

Bernanke's confirmation would be an endorsement of the status quo, and that is not acceptable.

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