Should Ben Bernanke be confirmed as the Chairman of the Federal Reserve? I am absolutely certain that he should be replaced.
Ben Bernanke is an “expert” on economics, and many observers hail him as a “savior” of our economy. The problem is that he didn’t save our economy. He only saved a few very large financial institutions, and he did it by loading main-street with debt and the loss of a significant portion of their life savings.
Bernanke may be as smart as any of our economic experts, which is a good indication of why the Great Depression lasted for more than a decade, the Japanese recession extended for ten years, and the current American depression may last longer than both of these. If Bernanke is as good as our Ivory Towers have to offer, then why should we replace him?
There may be several good reasons why we should consider replacing Bernanke, but the most important reason is that he doesn’t know what he thinks he knows. In his testimony before congress he stated that he acted to save the financial institutions because that was the lesson to be learned from the Great Depression. The view he voiced was that the financial institutions had to be saved because they were the key to keeping the money flowing. In other words, if the financial institutions failed the money would stop flowing and we would continue to lose jobs. The problem is that he was right about the need to keep the money flowing to save jobs, but he was wrong about the importance of the financial institutions and their role in keeping the money flowing.
All cultural systems are complex evolving information systems (as explained by the Complex-Systems Theory of Culture: Gehlsen, 2009). Economic systems are dependent on the flow of information, and modern economic systems are dependent on the flow of money, which is an extension of the flow of information. The first step in understanding our economic system is to accept that consumer spending is the foundation of the flow of money. This fact indicates that you can manipulate financial systems drastically and to extremes, but the economic system won’t improve or grow until consumers have enough money to produce an adequate flow through the economy.
Replacing Bernanke probably won’t improve the economic advice President Obama is receiving, and it probably won’t alter the economic policies that have been so misguided and disastrous for more than thirty years. They are disastrous because they culminated in the economic collapse in September of 2008, which we have failed to begin to extricate ourselves from. I really can’t imagine that any of the “experts” that provide economic advice for our politicians would have performed any better than Bernanke. Like him they would probably have acted to save the wealth of the rich at the expense of the working class, and like him, they would all probably have sacrificed the life savings of ordinary Americans in an effort to save the financial institutions they seem to worship as the sacred foundation of our economic system.
The only reason that I advocate replacing Bernanke is found in the illogical and unreasoning hope that his replacement might forsake the “conventional wisdom” of the economic discipline and accidentally hit upon a new, even radical, approach to recovery. It’s an astronomical long-shot, but a new Chairman of the Federal Reserve might just try a seemingly absurd approach, which could just be the one that saves our economy before it collapses further.