Chairmen speak, the public is supposed to listen; and, historically, they have.
Yet, Chairman Bernanke's remarks at his historic first press conference were
met by a tidal wave of skepticism. Although many of the mainstream outlets,
especially those lucky enough to be granted question slots, characterized his
performance as "serious" and "masterful," most
rank-and-file Americans were left with a very different impression.
glance at the broad internet coverage of the event shows that the public is
deeply skeptical of Mr. Bernanke and the actions he is taking. If that skepticism
runs more than skin-deep, it could herald a fundamental change in American
politics and a restoration of sound finance in America. Already politicians
seem to be taking notice.
over raising the national debt ceiling has prompted many members of Congress
to talk about a negotiated and practical plan to slash government spending.
The early posturing has begun. While much of it is merely window dressing, as
politicians continue to escalate their rhetoric, they will eventually be
forced to actually do something to make good on their promises. Their mouths
are writing checks that their budget proposals may have to cash.
Back at the
Fed's first-ever press conference, Bernanke relied on the gravity of his
office to awe his listeners and assure markets. No doubt that he believes
that increased 'transparency' will translate into support. On this point, he
has miscalculated. He trotted out a key series of officially manipulated
statistics that show inflation to be under two percent and unemployment to be
under nine percent. But Americans are aware that the prices they pay for the
things they actually need are rising much faster. While the prices of
electronics and houses may have fallen, the 'basics' have risen dramatically.
Indeed, over the past two years, the oil that powers our cars has risen by 74
percent, the corn we eat by 189 percent, and cotton, the self-proclaimed
"fabric of our lives," by 380 percent! No wonder the body politic
suspects the Chairman may be out of touch with reality.
unemployment front, the Fed strangely discounts those who have given up
looking for work from its metrics. This instinctively strikes most people, myself included, as rather bizarre. If this despondent
class is added to those hopeful souls who persist in the futile mailing of
countless resumés, the real unemployment
figure currently sits around 16 percent - 7 points higher than the Fed's
But even as
Bernanke pointed to these watered-down economic figures, he refused to
consider them to be anything but temporary. He assured all that the prolonged
malaise does not prove that current Fed strategy has been ineffective.
Bernanke sought to fend the blame for higher oil prices away from a weak US
dollar and onto increased world demand.
Fed Chairman attempted to convince his increasingly skeptical audience that
he wanted a strong dollar. The Internet erupted in response, saying: "if
you want a strong dollar, why are you doing almost everything possible to
is the Chief Architect of Dollar Destruction. It seems that everyone in
America understands this except the Chairman. Even the European Central Bank
has expressed its deep concern at America's weak dollar policy. In the
private sector, the University of Texas has invested $1 billion in physical
gold. This represents an unprecedented vote of no confidence in this
Administration's stewardship of fiscal and monetary policy.
observers have suggested that the Fed is debasing the US dollar deliberately
to cheat creditors and subsidize exports. Still others postulate that the Fed
is trying deliberately to ferment an international currency crisis. The aim
of this effort would be to introduce a new international currency, presumably
to be administered by the IMF, before political pressure to accept the
Chinese yuan as the next primary reserve becomes
Whatever his real motivations may be, Bernanke's pronouncements are
becoming so poorly tethered to reality that more and more citizens are coming
to understand that the emperor has no clothes, that the man behind the
curtain has no idea what levers to pull. Paradoxically, this bodes well for
the future of American politics. Newfound skepticism could finally lead to
major political changes that the country so desperately needs.
Senior Market Strategist
Euro Pacific Capital, Inc.
20271 Acacia Street, #200 Newport Beach, CA 92660
Toll-free: 888-377-3722 / Direct: 203-972-9300 Fax:
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