Yes, he held a press conference. Why would the world want a press conference from a central banker? Ah…good question. Because he’s a celebrity… He’s powerful. He moves and he shakes. He’s as popular as William and Kate put together.
In the past, a central banker was meant to be anonymous…quiet…hidden away somewhere so far in the background that the ordinary man wouldn’t know his name or recognize his face.
A good central banker was one you never heard of. He did his job. He made sure that the country had enough gold to cover its foreign debts and domestic currency issuance. He did not worry about full employment. Nor did he concern himself with “growth.” His job was to make sure the money was good. That’s all. If he did it well, he was practically a nobody.
If he did it badly, on the other hand, he might be castrated. Or, at least he would be disgraced.
Times have changed. Alan Greenspan turned central bankers into celebrities. He stood with Hillary Clinton at her husband’s State of the Union address…thus signifying the union of money and power, much like the Pope and the Holy Roman Emperor standing together on the balcony of the Vatican.
And now, who wouldn’t recognize Ben Bernanke’s mug?
In fact, he is widely thought to be responsible for saving Christendom, Jewry and all of western civilization. Yes, he stepped in where fools feared to tread – and rescued the whole shebang.
And now what?
Well, the rescue effort has proven to be a big failure. TARP, TALF, QE1, QE2… The US feds put at risk more than $10 trillion to turn the situation around. Federal deficits alone add up to $4.5 trillion over the last 3 years.
And for what? Housing is still falling. The unemployment rate is still over 10%…unless you stop counting people who haven’t been able to find work. More than 40 million people are on food stamps. And every increase in gasoline or food pinches household budgets like a tax increase.
But now, not only does the central banker play a much bigger role in the life of a modern economy, so does the government. A report earlier this week told us that more than half of “income growth” in the last 10 years comes from the feds!
Wait a minute. Where does government get any money? How can the feds give more than half US households more than half their income gains? Who pays for it?
Doesn’t that money really belong to someone else? Aren’t they just robbing Peter to pay Paul?
Yes, Of course they are. But Peter isn’t old enough to vote. So who cares?
And now The Fiscal Times reports that US voters – as a whole – receive more in payments from the government than they pay in taxes.
The feds have turned half the population into incipient zombies…feeding off the other half of the population…and their children…and their children’s children.
But let’s get back to Bernanke. What did he have to say yesterday? Well…nothing!
Here’s the AP report:
WASHINGTON (AP) – The US economy and job creation have strengthened enough for the Federal Reserve to end on schedule a program of buying Treasury bonds to help the economy, the Fed said Wednesday.
Fed Chairman Ben Bernanke spoke at a news conference after the meeting. It was the first time in the Fed’s 98-year history that a chairman has begun holding regular sessions with reporters.
Bernanke said that as long as the Fed continues to say rates will remain at historic lows for “an extended period,” rates won’t rise until the Fed has met at least twice more. The Fed board meets about every six weeks.
Bernanke said he expects the economy to continue growing through next year and 2013.
He acknowledged that higher gasoline prices are creating a financial hardship for many Americans. But he said the Fed doesn’t think gas prices will continue to rise at their recent pace.
And more thoughts…
With Bernanke’s dulcet assurances still echoing in their ears, investors went back to their errors. They bought more stocks – pushing the Dow up 93 points. They bought more gold too. The yellow metal rose $13.
One thing they didn’t buy was the dollar. The greenback is at an all- time low against the Swiss franc. Against the euro, it seems to be returning to its all-time low. And against gold, of course, it passed its all time low many months ago.
And now that the economy is slowly but surely recovering – Bernanke said so! – many investors are beginning to wonder if gold may have passed its all time high too.
Let’s hope people believe it.
The more who think so, the better. Yes…sell gold…please! Sell it in a panic. Sell it cheap. Sell it to the rag and bone man! Sell it to the pawnshop! Sell it at parties organized by newspaper ads! Sell it to people who put notices on eBay! Sell…sell…sell…
And then, you know what to do, don’t you, dear reader?
*** An old friend has written a delightful book. Alex Green is an investment analyst. We have never completely shared his investment philosophy; he is optimistic, capable and earnest, with little appreciation for our end-of-the-world-as-we-have-known-it perspective.
But we share an interest. His new book Beyond Wealth is about what interests us both – that is, what money can’t buy.
The burden of the book is obvious, but not inconsequential. It reminds us of who we are and what we are. Making and spending money is part of what we do and much of what we care about. But it is not everything.
Getting rich is a competitive activity. We can’t all be rich. Only a few can. There’s no secret to it. Those who become rich tend to work harder at it than most people. Getting rich requires you to stay focused, to exclude from your life many of the distractions, idleness, chitchat and casual entertainments that make life interesting, lively, and agreeable. Rich people are often highly competitive, single-minded, and self-disciplined. That is, they are dull workaholics and terrible dinner companions.
Enjoying a rich life is an entirely different matter. You have to let your mind wander a bit. You have to be willing to “waste time” with friends, to spend time reading, thinking and amusing yourself with no apparent or immediate prospect of a reward. You have to travel, with no particular destination in mind…and be prepared for the serendipitous encounter along the way.
Where’s the pay off? Well, it comes later…unbidden…unmeasured…and untaxed. It shows up on no balance sheet and no portfolio review. You will not be able to put a number on it…nor brag about how much it exceeds the benchmark. And yet, it is what you need to live a “rich life.”
Alex’s new book covers values, not prices. He describes the value in all manner of things – friends, long walks…hobbies…travel…philosophy…poetry…music – all the things the hard-charging wealth maximizer eschews.
The book itself is a distraction from the world of money…a delightful one. Click here to find out for yourself.
For Daily Reckoning Australia