Blog

By: Michael de Yoanna

Category: Military, Panorama, People, Politics

Posted: March 26, 2010 9:09 AM

Perlmutter Questions Bernanke on Unemployment

Coloradans' personal income fell by 3.9 percent between 2008 and 2009, according to federal officials, in the latest bad news about the economy. Per-capita, residents in the state averaged $41,344 annually in 2009, down from $43,021 the prior year, writes the Denver Business Journal. As that data was released, lawmakers in Washington, D.C., heard from Federal Reserve Board Chairman Ben Bernanke, who faced a rather pointed question about the sluggish economy from Congressman Ed Perlmutter, a Colorado Democrat. Aided by charts showing Americans to be the most productive they've been per person in six decades, Perlmutter also noted high unemployment---millions of Americans out of work (via Barron's). "Where are you with your ideas for getting people back to work? If you tighten the money supply, what do you expect happens to our effort to get people back to work?" Perlmutter asked. Bernanke responded, in part, "From the Federal Reserve’s perspective, we are recovering from a very deep recession, and monetary policy is more accommodative than it’s ever been. Interest rates are close to zero, and we’ve more than doubled our balance sheets, and used all these other policies to get markets working again, and increase capital in the banking industry. We are taking very seriously the unemployment situation, and we take seriously that part of our mandate, for maximum employment."
Comments

And people say we have a free market in banking (usually in conjunction with blaming markets for our various crises)! Realize that banks should be talking about making a *profit*, not whether their actions affect unemployment. By doing this, they will be facilitating employment. The Fed on the other hand, rather than being the free market tool people claimed it was under Greenspan, is basically an arm of government policy. That is why it lowered interest rates too much (to assist affordable housing policy objectives) and which is ultimately why we had a crash. The scapegoats known as derivatives, and so on, were merely along for the ride on the glut of credit. What we need is *truly* free markets and banks, not puppets beholden to Congresspersons, for which markets are unjustly taking blame at every turn.

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