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With dissension in the ranks growing,
the dovish bent for central bank policy was saved late last week by New York
Fed President William “You Can’t Eat iPads”
Dudely after Fed head James Bullard started talking
about pulling up short on QE2 and then Narayana Kocherlakota said it might be better to raise interest
rates sooner, rather than later.
Fed Chairman Ben Bernanke was no doubt
watching all of this and is now probably forced to consult his Fed Hawk-O-Meter more often than usual as he gets ready for his first post-FOMC press
conference later this month. Here’s what things might have sounded like
if that press conference had been conducted on Friday, at least the version offered up by Dave Cohen over at Decline of the Empire.
An unusually relaxed Ben Bernanke waved
off fellow FOMC members Bill Dudley and Janet Yellen
today to talk to the assembled press. Fed policy remained unchanged after the
meeting, but the Chairman seemed eager to talk.
“Still printing money and
accommodating the banks, folks,”
Mr. Bernanke led off, “still blowing bubbles. I’ll take any and all
questions.”
…
The Chairman had no trouble believing that higher energy and food prices were
punishing Americans, but had previously denied that Fed policy was
responsible for the price increases. He was singing a different tune today.
“Oil prices? Food prices? If you’re printing money and
trashing the dollar like we’re doing, and you give speculators a big
bunch of those new greenbacks to play with, they’re gonna’
do what gamblers do—jack up the price of everything!
Oil, corn, gold—you name it. No surprise there.”
Bernanke continued. “A fiat money
system? With fractional reserve lending? You gotta’
love it! I mean, I still can’t believe those Arabs give us their
precious oil for our worthless paper. But nothing happens without a credible
threat of inflation. That’s our view.”
The Fed chief’s last comment was
“I am the invisible hand!”, a statement
that, like a lot of other things associated with the Fed, would be much
funnier if it weren’t true.
Tim Iacono
Iacono Research.com
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