Wednesday, December 16, 2009

Fed Chairman Ben Bernanke

"It just seems unlikely that Time magazine will name any other person as the 'Person of the Year' than Ben Bernanke."

-- Blog post 'Bernanke' on 21st Century Politics, Monday, August 24, 2009.

So that is the case today. Time announced Bernanke as their Person of the Year 2009. In a way it was easy to see considering universally recognized deft handling of Great Recession by Fed.

However, America needs to understand that going forward there is only one task for Fed - unwinding of the liquidity and other measures put in motion to fight the recession. It will not be Fed which will provide the employment or expanded credit to businesses. It is going to be policies adopted by the Congress and pursued by this Administration which will have the direct impact. Bernanke effect will be muted in 2010 and beyond. The only relevance of Bernanke will be how systematic unwinding of the Fed liquidity takes place.

In any case, Bernanke's hands are full in fighting the Congress which has folks like Ron Paul who basically wants to destroy Fed and if not that then at least add the crippling audit of Fed's books. Law makers have a point since Fed, all said and done, does have more autonomy and freedom than a normal accountability what People would demand. Agreed that it is the same freedom and flexibility which precisely helped Bernanke in fighting the Great Recession; but that is also another name of 'getting away' with the neglect when Alan Greenspan essentially mismanaged American Economy and brought America and the Global Economy to the stand still. Congress is trying restitution of Fed sins before Bernanke, the sins to which even Bernanke was partially responsible. How to bring a sense to such Fed regulations and how to thread the needle; that is a tough problem which this blogger can not speculate. However, for good or bad Congress does not have that luxury and it will have to address it as a part of ongoing Financial Regulation Bills which are proceeding through the labyrinth of Congress. Hope is Congress gets it right in this delicate re-arrangement of Fed otherwise America is likely to miss competent masters like Bernanke.

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