Bernanke’s Reappointment Confirms Fed’s Many Failures

The Obama administration’s decision to keep Ben Bernanke as chairman of the Federal Reserve affirms the Fed’s bad policy decisions over the past few years.

Under Mr Bernanke’s leadership, the Fed has increased its power and spent billions of taxpayer dollars, to little effect.

It has refused to accept any responsibility for the current crisis, instead seeking unprecedented increases in its influence over the economy – first through the bail-outs of financial companies such as Bear Sterns and AIG, and continued through the multibillion-dollar stimulus and troubled asset relief initiatives.

The Fed artificially maintained an unhealthy housing bubble for years by forcing interest rates lower and encouraging the real estate sector to grow on socialised government credit rather than on free-market capital savings and investment. It is rehashing this failed policy with its artificial propping-up of credit markets through interest rate manipulation and massive federal bail-outs of the banking and investment industries.

The historic increases in power being given to the Fed through the troubled asset relief programme and the stimulus packages are undeserved. The Fed’s failures should not be rewarded with more power, but less.