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Ben Bernanke has got to be laughing it up after being reappointed to another term as Federal Reserve chairman. What
else could we expect from the ex-lawyers and lifetime Beltway bandits voting
on global monetary policy?
As he starts his second term, I’m once again reminded about how
supremely unqualified this man is for the job. Prior to becoming Fed
chairman, Ben Bernanke basically had zero experience outside academia. His
resume only includes three full-time years working for the Federal Reserve
and eight months on George W. Bush’s Council of Economic Advisors. The
other 23 years of his career were spent teaching college.
A successful publicly traded company could never choose a similar
candidate. Imagine a company announcing, “We’re changing CEOs.
Our new choice is an excellent professor of management from Princeton. His
organizational skills include writing a syllabus, assembling textbooks, and
publishing in academic journals with no real-world consequences. Further, our
candidate has worked for three years in a government-like position and eight
months in the White House.”
As an investor, I would flip out. Yet, this is the exact guy
responsible for setting the entire country’s interest rates. To take a
further look at Ben Bernanke, I think that we should use Doug Casey’s
own 8 P’s of investing in resource stocks applied
in our publications, such as the International Speculator.
One of Doug’s most important P’s for choosing a company is
People. So, how would Bernanke fare should we apply these same standards to
him?
Doug points out,
“To state the obvious, Boy Scout virtues like honesty, thrift,
courage, and diligence are always good traits for your management teams, as
are competence, knowledge, experience and, perhaps most importantly, a track
record of success.”
Let’s start with honesty, competence, and a track record of
success. As this great YouTube compilation of Bernanke quotes shows, the
chairman has a track record of being wrong on just about everything –
including the housing bubble, economic fundamentals, and risky bank
loans. That pretty much rules out “track record of
success.”
This leaves only two options for his character – either
he’s an honest idiot or a malicious genius. Regardless, he would fail
at least two of the three above-mentioned characteristics.
Let’s continue with diligence and thrift. He has been very
diligent about printing piles of money to alleviate his deflationary phobia.
Maybe that’s a partial credit there. Thrift… please highlight it and make a bookmark in the dictionary. Then,
ship the copy to the Fed.
Well, what about courage? Not only does Ben seem to lack confidence in
front of crowds – a strange characteristic for a 23-year college
professor – but he’s a complete pushover as well. Whenever the
market dips slightly, Bernanke comes out promising endless liquidity and
infinitely low interest rates. I’m not sure that we’ve ever had a
more cowardly Fed chairman. Bernanke has to be the complete opposite of the
tough-as-nails Volcker who raised interest rates to double digits without
even flinching.
On knowledge, I will give him some credit. He’s written a bunch
of academic articles and has surely read a lot of books on macroeconomics.
But his complete lack of first-hand market experience prevents him from
really utilizing that knowledge. Plus, if he really knew so much about
interest rates, he would have spent more time making money and less time
teaching.
Experience is the key. Think MBA programs in business. Why do these
programs help so many managers when the topics covered are nearly identical
to undergraduate programs? It’s because the second time around in
school, students come to the classroom with experience. The synergy between
education and experience is the key. Education alone is useless.
Ultimately, out of the eight characteristics that Doug mentions, Ben
Bernanke fails about six or seven. This guy could never make it as a CEO. Yet
the man continues leading the country into disaster as the chief executive
for U.S. interest rates. This would almost be too funny were it not so
frightening.
Bernanke may not pass Doug Casey’s diligent 8 Ps test… but
the companies recommended in Casey’s International Speculator sure do.
Investing in the best of the best junior resource stocks is a good way to
safeguard your assets from the meddling and – let’s face it
– downright stupidity of the government. Click
here to learn more.
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