In a recent hard-hitting interview with Diane Sawyer, Helicopter Ben Bernanke made these cautious comments about the nation’s economic recovery:
“It’s far too early to declare victory. “The recent news has been good. But I think we need to be cautious and make sure this is sustainable. And — we haven’t quite yet got to the point where we can be completely confident that we’re on a track to full recovery.”
Asked if another round of quantitative easing, or large- scale bond purchases, remains “on the table,” the 58-year-old Fed chief said, “we don’t take any options off the table. We have to be prepared to respond to however the economy evolves.”
Sawyer’s dreamy China-doll blue eyes gazed into his; a micro-expression hint of a smile tugged at one corner of her mouth, a tell which the Ben Bernank missed, having been lulled by the lovely blond coiffure floating about the journalist’s head.
Once she noticed the dilation of Ben’s pupils as he soaked in her gentle visage, she pounced.
“I have a few questions our viewers would like answered, Chairman Bernanke.”
“For instance, why do you think that lending at almost zero percent to banks and then having them lend that money back to the government at 2 or 3 percent is a good way of conducting monetary policy in a crisis?
Why do you think that paying interest on reserves is the best way to control credit growth when the Fed exits from QE? Couldn’t you just raise reserve requirements and forgo the interest costs that end up increasing deficits? Remember the Fed hands over its profit to the Treasury.
Why do you think quantitative easing was anything more than a financial transaction? You took some bonds off the market and replaced them with cash. But outside of pumping up commodity prices and depreciating the dollar, how does this flow through to support underlying economic activity, the housing market or job creation? “
Some people say that official unemployment figures are just plain silly, and that any recovery is barely possible in the foreseeable future. The recent report from the NECSI claims that food prices will reach such highs that social unrest may explode even here in the US. Many people blame your quantitative easing for rampant speculative commodity trading driving up prices. What would you like to say to them, and how will you answer these questions many are asking, Mr. Chairman?”
Ben’s Blonde Goddess reveries finally blew apart when he heard her final question. Shock, dismay and longing registered on his face in turns; he twisted in his chair, stalling for time and composure. As he cleared his throat, he cocked his head slightly, and his habitual look of benign cunning locked in.
“Well, Diane, there are a lot of armchair Fed-chairs in the world, but as Blankfein always says, “The buck stops here.” I mean here, of course, not at Goldman. That Lloyd; have you heard that he’s started a fund to buy some of AIG’s dreck mortgage bonds? What a great signal to send to the confidence fairies, don’t you think? This nation knows that if Goldman’s bullish on mortgages, recovery isn’t far behind.
Those are all good questions, Diane, and I’ll send you a memo answering them when I get back to the office. But in the time we have left today before my tee time with Jamie, I’d like you to know that the Fed is fully committed to putting Americans back to work. Now, when we loaned those trillions to the Big Banks at low rates, the (excuse) reason was that increased liquidity would enable them to lend to small businesses, which we all know help drive the economy, and create jobs.
Now Tim and I had discussed tying Fed zero-rate loans to lending, but coming up with hard policy on those metrics would have been tough, and would likely have stifled any creatively sound business practices, so…we left it to the honor of the banks, knowing they’d be grateful for our largesse. That they have looked toward their own balance sheets instead was wise in that the public’s confidence in Wall Street needs to be stored, and it’s working, though clearly, employment rates always lag a bit in any recovery.
But I told you earlier that I am flexible and adaptive, and keep my ear to the American ground at all times, ready to slide into action as needed. Now, given that I have no power over bank lending, and small businesses need capital to prevent more massive business closures due the downturn caused by an impossible to predict housing bubble burst, I am ready to announce a new stimulative partnership cum qualitative easing [sic] plan. I’d like to say that after reading a few key pieces of recent news, they melded into one large Gestalt realignment in waking life. But the truth is that The Plan came to me in a dream. Here’s how it will work, and it’s a Win-Win scenario all around.
It all started with the Madrid escorts, heh, heh. The high-end escorts there have decided that their voices need to be heard, and that since Spain’s banks aren’t lending to small and medium-sized businesses, they’ve gone on strike, and are withholding sexual services from them until they fulfill their duties to society. The bankers have asked the government to mediate, but so far the government has declined. Thus, it seems to me that it will be an effective action in the near future.
Now you may know about the plight of the Soccer Mom Madam, her Who’s Who client list, and her need for funds to pay her legal fees. Ms. Gristina, Robert Mueller and my deputy director have all but finalized a plan whereby the FBI provides the names and numbers of high-end escort Madams around the country, she contracts with them to increase their service providers, and spreads around some of the money we’ll invest with her. Once the hooks are set in the big fish, they pull Madrids on the bankers, heh. The bankers will be forced to lend to the little guys, and jobs will pop up like desert flowers after a rain.
This new Fed program I like to call “Qualitative Easing.” Get it Diane? The other beauty part of it is that there will be a whole new layer of high-end earners who profit directly from the Elite Class; we all think it’s brilliant. What could go wrong? It’s Trickle Down/Twinkle Up Economics writ large.”
(cross-posted soon at kgblogz.com)