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Bernanke Goes Rogue
by Gary North
Tea Party Economist
Recently by Gary North: San Francisco Teens Create Rent-a-Car Company. City Sues Them: ‘Unfair Business Practices.’
The Federal Reserve is in damage-control mode. Last week’s announcement by Bernanke unilaterally scrapped the official unemployment rate target of the Federal Open Market Committee (FOMC), which sets monetary policy. I reported on this on June 25.
He raised the target from 6.5% to 7%. This indicated that the FOMC has decided that it could stop inflating earlier than previously reported. This is what Bernanke said: QE3 may “taper off” this year.
His announcement sank stock markets around the world. It created a panic-driven crisis based on the idea that the FOMC might stop the printing presses early.
Mortgage rates are up by a third from last December, when the Federal Reserve adopted QE3. The FOMC said at the time that it did this to keep mortgage rates down. The policy has blown up in the FED’s face.
To the rescue comes the #2 Federal Reserve official, William Dudley, the president of the Federal Reserve Bank of New York, which is the most influential of the 12 privately owned regional FED banks. Before he was president, he was the chief economist for Goldman Sachs. In short, he is the #2 person of influence in the Federal Reserve System.
The Bloomberg headline said it well: “Federal Reserve officials intensified efforts to curb a growth-threatening rise in long-term interest rates, seeking to clarify comments by Chairman Ben S. Bernanke that triggered turmoil in global financial markets.”
Clarify, my foot. They are seeking to rein in Bernanke, who on his own authority changed the targets. Dudley is the Vice Chairman of the FOMC. They are trying to put out the interest rate fire that Bernanke’s comments last week produced in the bond market and mortgage market – the targets of QE3.
Bernanke has gone rogue. Dudley is trying to bring him under control. He is trying to persuade investors that QE3 is here to stay, and that the FED’s monetary inflation will continue to prop up the faltering U.S. economy.
I’m a taxi driver for the Elite. They told me to pull my money out of the market by March 2014. They also told me that they control what Bernanke says.