By Greg Hunter’s USAWatchdog.com
It appears the CBS TV show 60 Minutes is the Federal Reserve’s go-to place to get its message out to the country. Fed Chief Ben Bernanke, basically, told America last night that the trillions he pumped out into the world economy, because of the 2008 financial meltdown, was necessary to save us all from a depression. Ben also reassured America and the world Quantitative Easing (QE), or printing vast amount of dollars, will not have an inflationary downside. He told 60 Minutes reporter Scott Pelley he is “100%”sure inflation will remain under control and will not soar higher. In my opinion, what Mr. Bernanke said could not be further from the truth. Most of the world’s financial leaders from places like China, Russia, Germany and Brazil all think what the Fed is doing is a very bad idea.
Anyone who finds Mr. Bernanke’s inflation prediction comforting should look at his past forecasts. The Fed Chief has been wrong on almost every major prophecy he’s given since he’s been in office. Just 4 years ago, Ben Bernanke predicted “a leveling out or a modest softening” in residential real estate prices and that homeowners were in “reasonably good”financial shape. Three years ago, Mr. Bernanke said the sub-prime mortgage crisis “seems likely to be contained.” Since then, we’ve had record foreclosures in the millions per year, and in some markets, home values have been cut in half!
Bernanke admitted last night he did not see the financial meltdown coming. How could he say anything else? Pelley did ask Bernanke, “How did the Fed miss the looming financial crisis?” Bernanke responded, “There were large portions of the financial system that were not adequately covered by the regulatory oversight.” It was the Federal Reserve that said repeatedly Over-The-Counter derivatives did not have to be regulated. Derivatives are exotic and sometimes toxic “debt bets” with little or no regulation, standards or guarantees. Soured OTC derivatives were largely responsible for the meltdown of 2008. If there were large portions of the economy that “were not adequately covered by the regulatory oversight,” it was the Fed who lobbied against regulating these “debt bets.” So, the Federal Reserve’s lack of regulation over a market, that is hundreds of trillions of dollars in size, is the cause of the meltdown of 2008. 60 Minutes did not bring up this important point.
On the question of printing money, the Fed Chief said, “One myth that’s out there is that what we’re doing is printing money. We’re not printing money. The amount of money in circulation is not changing. . . .What we’re doing is lowering interest rates by buying treasury securities and, by lowering interest rates, we hope to stimulate the economy to grow faster.” The Fed iscreating money electronically to buy treasuries because if the U.S. financed the country’s debt through auction, foreign investors would demand much higher interest rates. So, the Fed is buying the government’s own debt and, thus, holding interest rates artificially low. If that is not “printing money,” I don’t know what is. The academic term is called “monetization,” and how Bernanke’s statement went unchallenged by Scott Pelley, is beyond me. 60 Minutes allowed the Fed to spew its prognosis about the chances for more inflation without any dissenting view, even though Pelley said critics think what the Fed is doing is a “terrible idea.” What kind of one-sided reporting is this?
I think it is the same kind of journalism I saw 60 Minutes do in August of 2009. I wrote about it in a post called “The Soft Truth.” Back then I said, “In June, 60 Minutes did an updated profile of Fed Chief Ben Bernanke. Good time to do this story because we are suffering through what former Fed Chief Paul Volker says is “the mother of all crises.” The Fed has denied Freedom of Information requests by two different news networks to get the Fed to reveal which banks got trillions of dollars to avoid systemic collapse . . . Why 60 minutes did not press the Fed Chief about the secrecy of vast sums of money is troubling to me. Should the American taxpayer expect the Fed to “fix” the system behind closed doors without public scrutiny? We did get to see Bernanke’s childhood home in the CBS story, and that is what’s really important!” (Click here to read the complete version of the Soft Truth.)
Mr. Bernanke is charged with guiding the economy at a time of great uncertainty. If 60 Minutes allowing the man in charge of monetary policy to explain what he is doing, shouldn’t his track record be of profound importance? Of course, and yet Bernanke was not asked to explain any of his terrible predictions and wrong market calls. Just this past August (in Jackson Hole Wyoming) Mr. Bernanke said, “I expect the economy to continue to expand in the second half of this year, albeit at a relatively modest pace.” In early November, the Fed announced more Quantitative Easing in the amount of $600 billion because the economy was still in the tank—another erroneous call. The Fed Chief did not rule out more QE and said, “It doesn’t seem likely that we’ll have a double dip recession.” Based on Mr. Bernanke’s record, I’d bet on another sharp downturn in the economy and more money printing to stop the fall.
When it came to sub-prime loans, Bernanke said, “One of the things I most regret is that we weren’t strong enough in putting in consumer protections to try to cut down on the subprime lending problem. That’s an area where I think we could have done more.” The Fed wants to protect consumers? Is that why the Fed is trying to make it harder for consumers to stop foreclosures? McClatchy.com reported last week, “As Americans continue to lose their homes in record numbers, the Federal Reserve is considering making it much harder for homeowners to stop foreclosures and escape predatory home loans with onerous terms. The Fed’s proposal to amend a 42-year-old provision of the federal Truth in Lending Act has angered labor, civil rights and consumer advocacy groups along with a slew of foreclosure defense attorneys.” (Click here for the complete story from McClatchy.com.) Why didn’t 60 catch this obvious piece of BS?
The 60 Minutes story was more of a government information video than honest journalism. Not exploring Mr. Bernanke’s dismal track record is “too stupid to be stupid.” Shame on 60 Minutes for masquerading as a news program and allowing disinformation and bad calls to go unquestioned and unchallenged.