Wednesday, December 23, 2009
UC weighs in: "Reconfirm Ben Bernanke!"
1. There's no prospect of getting someone better if Mr. Bernanke's term is not renewed.
2. He claims he can finesse an exit from the massive expansion of money and credit he's directed. We believe he cannot. The question ought to be put to the test. If Bernanke is right, let him be there to earn the credit. If he's wrong, let him be the one left holding the bag. If he's replaced, and his policies fail, there'll always be the defense that replacing Bernanke was the source of the failure.
Bernanke's critics think that his leadership has been destructive (I concur), and therefore oppose a second term for him. But points 1 and 2 together are sufficient to refute the conclusion that Bernanke should not be re-appointed.
And so to the Senate...please reconfirm Ben Bernanke.
As of press time we were unable to determine whether this is Chairman Bernanke asking the Senate Banking Committee to approve his renomination, or demonstrating how he proposes to "withdraw the extraordinary policy support" of umpteen trillions in liquidity he's created.
But I think with Bernanke the situation is different. If I am right (i.e. if Mises and Hayek are right) the damage is already done. We cannot avoid it by replacing Bernanke, it's too late. And there's absolutely no chance that someone who is really better could replace him.
It's dreadful, but we've already embarked on a course that leads to an inevitable wreck, in my view. This is a relatively "clean" experiment, and we should see it through. If we critics of this Keynesian nonsense are ever to make any headway, we have to be able to show that the long run consequences are as destructive as we warned.
And heck, there's always that probability of ε that Bernanke actually can remove excess liquidity. It will be interesting to see him try.