FEDERAL RESERVE CHAIR BEN BERNANKE: “60 Minutes” Interview Called “Troubling” (Guest in Phoenix or by phone)
Sunday night's “60 Minutes” interview with Federal Reserve Board Chairman Ben Bernanke was “troubling,” and CBS interviewer Scott Pelley was “misguided,” according to one monetary expert.
During the interview Pelley said that Mr. Bernanke's new $600 billion QE-2 stimulus plan is spending “the Fed's own reserves. It's not tax money. It does not add to the federal deficit.”
During the interview Mr. Bernanke said: “We're not printing money,” said Mr. Bernanke during the interview. “The amount of currency in circulation is not changing. The money supply is not changing in any significant way.”
“But the Fed is conjuring $600 billion by printing money out of thin air,” says
Craig R. Smith, Chairman of Swiss America. “This is twice as many paper dollars as are now circulating in every American wallet and piggy bank.”
“This makes high inflation inevitable,” says Smith. “And how can the Fed's purchasing of bonds and other government debt obligations not add to the federal deficit when up to 41 cents of every dollar Congress spends is already borrowed?”
“Technically this is not tax money, but it will pick American pockets by stealing up to 20 percent of the purchasing power of dollars in people's paychecks and life savings,” says Smith. “This value will be robbed from working people's savings via inflation, while giving the politicians $600 billion more to spend.”
“It looks and walks and quacks like a tax,” says Smith. “By spending trillions of dollars printed out of nowhere, the Fed has been imposing the largest de facto tax increases in history on Americans in the form of fast-approaching, dollar-crashing inflation that could easily turn into hyperinflation.”
The cover of Smith's new book Crashing the Dollar: How to Survive a Global Currency Collapse depicts a praying Ben Bernanke as President Barack Obama's co-pilot flying a paper-dollar airplane that is burning and headed down.
“Frankly, Mr. Bernanke was more forthcoming in his 2009 interview with '60 Minutes', in which he said he saw 'green shoots' of economic improvement,” says Smith. “In this 2009 interview he acknowledged that such Fed spending was 'effectively' the same as 'printing money.'”
Smith added, “The '60 Minutes' interview was also troubling in other ways. Mr. Bernanke appeared to acknowledge that his $600 billion Quantitative Easing-2 stimulus may not do enough to revive the economy, because Bernanke said 'it's certainly possible' that even more money will be needed,” says Smith.
“On Sunday night Mr. Bernanke thus opened the door to QE-3, QE-4 and God-only-knows how many more transfusions of Quantitative Easing money to keep our economy alive,” says Smith. “Yet every time the Fed prints more money, the U.S. Dollar loses more value and gets weaker. The dollar keeps spiraling down and, unless Fed policy changes direction, will crash.”
“On Sunday night reporter Pelley said that some of 'the most conservative members on Capitol Hill....are calling for reducing the Fed's role',” says Smith.
“CBS juxtaposed this to Bernanke saying that the Fed should be free to 'make policy without short term political concerns....to do what's best for the economy',” says Smith. “But Mr. Pelley never explained what the actual issues here are.”
“One key issue is transparency,” said Smith. “The Fed is a private cartel, but its Chairman is appointed by the President and it has the de facto power to tax all of us. What the Fed does should be more open to congressional and journalist scrutiny.”
“The 'conservative members' Mr. Pelley referred to are Texas Congressman Ron Paul, who wants the Fed to be audited,” says Smith, “and members such as Indiana Congressman Mike Pence, who wants to reduce political influence on the Fed.”
“The original mandate of the Federal Reserve, at least in theory, was to protect paper money's value,” says Smith. “But during President Jimmy Carter's Administration in the late 1970s the Fed was given a second mandate: to adjust America's money supply to maximize employment.”
“Sound money requires stability, but politicians maximize employment by creating what they see as the 'permanent stimulus' of inflation,” says Smith. “Inflation favors borrowers and spenders over savers by constantly eroding the value of saved and owed dollars.”
(Sunday night Mr. Bernanke declared that he had “one hundred percent” confidence in his ability to control inflation. In 2002 he said that deflation was equally easy to control by deliberately creating inflation as its antidote.)
“Since President Carter, the Fed has had two contradictory jobs – to protect the dollar's value, but also to inflate the money and slowly destroy its value to stimulate more spending and jobs,” says Smith.
“What Congressman Pence and others propose,” says Smith, “is to end this
second mandate on the Fed. This would move the Fed farther away from politics and back to its original job, at least in theory: protecting the dollar's value as both a medium of exchange and store of value. This is why Pelley never explained his backhanded slap at conservatives.”
“Pelley also went beyond unemployment, which days ago reportedly rose from 9.6 percent to 9.8 percent despite all the government stimulus spending,” says Smith. “Real unemployment and underemployment combined are almost certainly above 20 percent.”
“Mr. Pelley asked Chairman Bernanke about the income gap between rich and poor Americans, which the CBS reporter described as 'the biggest...of any industrialized country in the world.'”
“Mr. Pelley's question uses class warfare rhetoric,” says Smith, “but it was also inappropriate and misguided for another reason: the Federal Reserve Board has a mandate to maximize employment, but the Fed has nothing whatsoever to do with redistributing incomes to make the rich poorer or the poor richer.”
“Mr. Pelley's ideological question is simply beyond Mr. Bernanke's purview in his official capacity as Chairman of the Fed,” says Smith, “and it suggests that CBS has no problem with politicizing the Fed if those politics come from the Politically Correct end of the political spectrum.”
CBS Transcript of Bernanke “60 Minutes” Interview:
Fed Chairman Ben Bernanke's Take On The Economy: Talks to Scott Pelley About Unemployment, The Deficit and Pressing Economic Issues, December 5, 2010
Show Prep article in BUSINESS DAY, December 06, 2010
In Interview, Bernanke Backs Tax Code Shift By SEWELL CHAN
Federal Reserve Chairman Ben S. Bernanke said on "60 Minutes" that the tax code should be made more efficient.
UPDATE: Treasuries rose, sending 10-year note yields below 3 percent, after Federal Reserve Chairman Ben S.
Bernanke said the central bank may boost purchases of U.S. debt. The euro weakened and gold reached a record amid divisions over steps to halt the debt crisis, while U.S. stocks retreated:
ABOUT YOUR EXPERT GUEST CRAIG R. SMITH…
Craig R. Smith is an author, commentator and popular media guest because he instantly engages audiences with his common-sense analyses of local, national and global trends. Serving as CEO of Swiss America for over 25 years, Craig understands that Americans want solid answers to the tough questions and that real leadership begins with servanthood.
Craig is the author of books including “Black Gold Stranglehold: The Myth of Scarcity and the Politics of Oil,” which he co-authored with author Dr. Jerome R. Corsi, and most recently “Crashing the Dollar,” coauthored with Lowell Ponte. Sample TV interviews conducted by Craig R. Smith may be viewed at:
Crashing the Dollar:
How to Survive a Global Currency Collapse
By Craig R. Smith with Lowell Ponte
Published 10/2010, Paperback, 208 pages
"The United States is digging the biggest economic hole in human history. This hole of debt is now so deep that, if you listen carefully, you can hear the voices of Chinese creditors asking one another if they will ever get back the $900 billion they have lent to us."
America's debt, deficit and unfunded liabilities exceed $120 trillion, writes Smith, and are now impossible to pay off with either tax increases or spending cuts. Politicians of both parties, he writes, will simply print as many dollars as they need to "monetize" this debt, paying off with greatly devalued dollars.
But, much as happened in 1922-23 in Germany's Weimar Republic after World War I, write Smith and former think tank futurist Lowell Ponte, the printing of tens of trillions of dollars to pay America's debts will destroy the value of personal savings, pensions, fixed mortgages and other fixed-dollar assets. Sale Price: $9.95 (List price $12.95)