I decided to take some time off. So I asked Mike Larson to fill in for me today. He has some tough questions for Ben Bernanke … the kind that politicians are afraid to ask. I’m sure you’ll find Mike’s column informative and potentially profitable. — Martin
Last Thursday, Federal Reserve Chairman Ben Bernanke went before the Senate Banking Committee to answer questions about the Dodd-Frank bill. His testimony focused on bank regulation, financial stability, and the like — and so did many of the questions from committee members.
Me? I wish I could get Ben Bernanke right here in my office!
Forget those stage-managed Congressional hearings.
Forget the collegial Fed press conference we saw a few weeks ago.
I’d sit the Chairman down and ask him a very simple question, point-blank:
“What the heck do you think you’re doing?”
Why? Because right now, Bernanke is giving us the worst of all worlds — slowing growth AND higher inflation. He’s bucking the trend of virtually every prudent central banker the world over, and destroying our hard-earned wealth in the process.
The only way to defend yourself is to take immediate protective action. But first, let’s talk about …
The grilling I’d give Bernanke!
If Bernanke were sitting across from me, what would I say?
For starters, I’d go over the latest news on economic growth. I’d point out that retail sales rose just 0.5 percent in April, the smallest gain since last July. And I’d add that much of the gain stemmed from the higher price of gasoline and food, rather than strong demand for a broad basket of goods.
Then I’d note that initial jobless claims fell less than expected last week, while the four-week moving average of claims hit the highest since November. That means the 9 percent unemployment rate in April is all but certain to climb.
At the same time, I’d ask Bernanke just what he proposes to do about inflation — inflation that he continues to deny even exists! Wholesale prices surged 0.8 percent between March and April, more than expected, while jumping 6.8 percent from a year ago. That was the biggest annual rise in 31 months!
Consumer prices? The news stinks there too! They surged 3.2 percent from a year ago last month. That was the biggest rise in two and a half years, and we all know the official Consumer Price Index fails to reflect what we’re seeing in our daily lives.
Central banks everywhere are hiking interest rates and taking other steps to curb inflation in response. China just raised bank reserve requirements by another half-percentage point, the fifth such increase this year.
Norway also just hiked its benchmark interest rate by a quarter-point to 2.25 percent. That follows hikes over the past two months by Sweden, the Philippines, Malaysia, India, and the European Central Bank. Yet Bernanke and his buddies are sitting on their hands.
Oh and that housing recovery? The one that all those trillions of dollars in freshly printed money and government aid were supposed to spur? I’d ask him “What about that?”
The latest figures show home prices falling to within a whisker of fresh, multi-year lows! Meanwhile, 3.7 million mortgages are 90 days or more delinquent. So many foreclosures are overwhelming the system that it takes 400 days, on average, to process them!
Don’t wait for the Fed! Don’t wait for
Washington! Protect yourself now!
Unfortunately, I can’t ask Bernanke these questions face-to-face. But I can pretty much tell you what he’d say based on his public comments. He’d say he’s doing a darn fine job. He’d say quantitative easing has helped all of us. He’d say the only thing to do is stay the course.
And I’d say, “I can’t take it any more! There’s the door!”
Look folks, we obviously can’t count on Bernanke to change his disastrous course. Plus, with the U.S.’ $14.3 trillion debt load officially bumping up against the “ceiling” today, we clearly can’t count on legislators or the White House to get us out of this fiscal mess.
The only thing we can do is take urgent steps to protect ourselves … and even profit … from this financial and economic crisis!
Until next time,
Mike
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
