Bernanke Interview

Here's the Bernanke 60 Minutes interview. He says he is not printing money. What does he think it is when you take a blank check book and you start buying Treasuries? Let me help him. The seller of those Treasuries takes the check and deposits it into the bank. It then is a deposit. M1 by definition is the sum of currency, demand deposits, other checkable deposits, and Travelers checks. Here's a graph of m1 -- you decide if the Fed is printing money.

Our Fed Chairman doesn't seem to know how this works. He doesn't seem to know that the graph of both currency and m1 are both on a moonshot. He says he is not printing money. What then explains the sharp push up in the money supply - we know it's not bank lending.

He says the Fed didn't understand what was happening with insurance companies (and Lehman Brothers, for that matter) because insurance companies fell outside the regulatory scope. The fact is that the garbage they were insuring (especially AIG) was held by the banking system off balance sheet. This huge build-up was never mentioned in FOMC meetings! The fact is that the Fed meets with the primary dealers daily, and Bernanke expects the American people to believe that they were unaware of the credit default swaps taking place? He is saying basically that the Fed, who is responsible for overseeing the health of the banking system, was unaware of the actions that came close to undermining the whole system.

The Federal Open Market Committee was perhaps more interested at the time in the heady process of fixing prices a la maestro Greenspan.

The American people need to impeach Bernanke. He is clueless, and now he is being disingenuous with the American people.