Bernanke Hedges Bets

According to an AP story on May 5, 2009 Federal Reserve Chairman Ben Bernanke expects the US economy to “turn up” in late 2009. In his testimony to the Congress’ Joint Economic Committee however, he made cautionary statements. Basically, he communicated that things may be getting “less bad” in the current recession. But he also warned that recovery may be characterized by sub-par economic performance. What does it all mean? It means he doesn’t have a clue what is going to happen.

It is not his fault, except for being human like the rest of us economic participants. No one knows what economic decisions others are going to make between now and late 2009, let alone between now and the end of the week. That is the nature of economics. Billions of economic decisions are made by millions and millions of people every single hour of every single day. The economy is the sum total of all those decisions, for better or worse, depending on your macroeconomic viewpoint. The economy is not a machine with the likes of Bernanke and the Washington politicians watching the gauges or flipping switches and pulling levers. The government has become one of the economic participants, which is to the detriment of all because it uses aggressive force to try and manipulate outcomes.

This is clearly immoral because it means the government is trying to manipulate people by influencing their economic decisions. And with more than a dozen recessions in the last 80 years or so it obviously does not work so well. So why do Bernanke of the Federal Reserve and all the other economists giving out advice in Washington continue on this pointless and immoral mission? They do so because it consolidates power and wealth through coercive political means and advances their political careers.

It is not a conspiracy, but numerous powerful and politically connected people are pursuing their self-interest. (Some of them even have the audacity to call the rest of us “greedy” when we naturally pursue ours.) The great challenge for a proper government is to confine itself to rights protection. As James Madison pointed out, you must figure out a way to compel the government to control itself not just the governed. Obviously, the US government has not been able to do that.

Copyright 2009 Edward Podritske

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