Man of the Year, Ben Bernanke

16 12 2009

So if you are aware of Time Man of the Year award it was given to Ben Bernanke.  Mr. Bernanke is the Chairman of the Federal Reserve Board.  The Federal Reserve is the central planner of the USA economic system.  Almost like the wizard behind the scenes that can make things right at all times.  But the truth is there is no wizard to economic planning.  The Market determines that plan.   When I say that I mean a force that is out of everyone’s control will determine value, will determine success, will determine failure, and will determine stability.  When you try to plan it, balancing it will take a miracle.  Like the game where you have a ball going through a maze and you have to turn knobs to get it past each section without falling through a black hole.

I want to break this down into simple terms.   The market reacts on its own.  If a product is not selling, price will come down.  If a product sells a lot, price goes up or the buyer got the item at discount and can sell it on open market for a higher price.   Risk should determine interest rate otherwise  there is a false indicator in the market.  Today the Fed Reserve interest rate is between zero and .25 interest rate.  Nearly no cost for borrowing money but on the other hand, no one has equity so the market is saying risk is low since the interest rate is low.   When in fact, interest rates should be high relative to the risk of peoples low equity.  If I was lending money out to someone with bad credit, high risk of default and an asset backing it that had a chance of falling in price, I would want to lend at a high interest rate.

So the Man of the Year, Ben Bernanke, the wizard is pulling our strings while some Americans believe we  need a central planner while others believe he is the biggest con man in the world.

I leave it for you to decide…




One response

14 01 2010
Bryan Bowden

Ben Bernanke is a jackass! He could not figure his way out of a paperbag let alone the Federal Reserve System.

What we currently have taking place in relation to the FED is total governent politics and less economic rational. Our free market society is not free nor is there a true market. When banks and other financial instittutions can borrow large amounts of capital for 0.00 – 0.25% and the regular Joe and Jane American is paying 16.00 -up% we have a problem.

I agree with the higher interest fed rate but want to see management of credit at an all time low rate. If credit card debt rates could be brought in line with the current Fed Rate ( for a limited time period – say 3-5 years) then credit debt would be brought to 0.00 – 0.25% and thus the end result would be economic stimulation because We The People could actuall live.

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