Sunday, February 27, 2011

My Questions for Ben Bernank for His Semi-Annual Policy Reort to Congress

Ben "Bernank" Bernanke will appear in the Senate Banking Committee on Tuesday 3/1/2011 and in the House Financial Services Committee on Wednesday 3/2/2011 (starting at 10:00AM EST on both days); it is his semi-annual policy report to Congress.

Bloomberg columnist Caroline Baum has 5 questions for Bernank, in her effort to help out the Senators and Congressmen in the committees who may not be as astute as her in economic and financial matters, has come up with 5 questions she would ask Bernank. As she says, "To expect our elected representatives to have a good grasp on quantitative easing when Fed chief Ben Bernanke says the term is a misnomer is too much to ask."

(Can we expect them to have a good grasp on anything? I mean, other than on taxpayers' money?)

You can read about her 5 questions here, which I thought were not that much above what our elected representatives would be capable of asking. (Why QE2 is $600 billion, when are you going to raise short-term rates....etc.)

I have my own questions to Bernank:

  1. Where is gold that is supposed to belong to the US government?

  2. How much gold is there, at Fort Knox? At the Federal Reserve Bank of New York?

  3. If gold is not there, where did it go, how did it go, and who is responsible?

  4. Has the Fed participated in any way in gold/silver price manipulation?

  5. You said the Federal Reserve did not, and would not monetize Treasury debt. QE2 is de facto monetization, as you purchase Treasuries from the Primary Dealers that they got at the Treasury auctions only a few weeks before. Did you lie?

  6. How much loss has been sustained on the Fed's balance sheet since the start of QE2, as the rates on Treasury notes and bonds have been going up and the prices falling?

  7. How much are you paying to the Primary Dealers? How many extra billions are you giving to the PD by buying Treasuries from them, instead of buying directly through TreasuryDirect, for example?

  8. How do you respond to the accusations that your QE2 has unleashed the powerful price inflation around the world that in turn has triggered popular uprising against the rulers? Guide us through your logic that monetary inflation (QE2) does not cause price inflation. And don't give us the crap that there is no price inflation in core CPI, which excludes two of the items that matter most to people around the world who try to earn a decent living: food and energy.

  9. Is QE3 coming? Your Fed governors are saying yes (you and Bullard, for example) and no (Plosser, for one). When will we know? (And please stop this "good Fed, bad Fed" routine; it's getting tired.)

  10. And what was the reasoning behind QE2, again? QE1 was to help out Wall Street banks who are the Fed member banks. QE2, did you say it was to help out the US federal government? How do you think it has helped, other than the levitating stock market and soaring commodity market?

  11. Since when has the Fed had the third mandate of raising the stock market? Why do you think the stock market is the reflection of the economy?

for a start...


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