Since he was first appointed to replace Greenspan in Feb of 2006, Bernanke has been very active. The last 7 Fed meetings resulted in interest rates cuts. A number of them being of the 1/2 to 3/4 point variety. The value of the dollar has dropped like a lead balloon since he took over. Question is has he been over zealous with his rate cuts or has the subprime mess forced his hand. Has he been too worried about a slow down that he over reacted and issued to steep of rate cuts when lesser rate cuts may have done just as much good? The weak dollar produced by the lower rate has gotten tot he point where it is crippling the economy's ability to grow. Commodities such as crude, food and metals are going through the roof due to the weaker dollar. The dollar is showing some signs of strengthening but is far below where it was pre Bernanke. If ti continues to strengthen and get back close to where it was before, should Bernanke be replaced or do we give him another chance to see if he can do the job? It is clear he is no Greenspan.
ncrdbl1 Wrote:Since he was first appointed to replace Greenspan in Feb of 2006, Bernanke has been very active. The last 7 Fed meetings resulted in interest rates cuts. A number of them being of the 1/2 to 3/4 point variety. The value of the dollar has dropped like a lead balloon since he took over. Question is has he been over zealous with his rate cuts or has the subprime mess forced his hand. Has he been too worried about a slow down that he over reacted and issued to steep of rate cuts when lesser rate cuts may have done just as much good? The weak dollar produced by the lower rate has gotten tot he point where it is crippling the economy's ability to grow. Commodities such as crude, food and metals are going through the roof due to the weaker dollar. The dollar is showing some signs of strengthening but is far below where it was pre Bernanke. If ti continues to strengthen and get back close to where it was before, should Bernanke be replaced or do we give him another chance to see if he can do the job? It is clear he is no Greenspan.
I think we can look to see the next POTUS to consider appointing a different Fed Chairman sometime early next year...nobody could be worse than Bernanke.
At least the dollar is showing some strength against the Yen and the Euro the past week. Mid day trading shows sweet light crude for June delivery is trading around $111 down from around $120 from the first of the week. The 1st quarter GDP showing growth instead of the negative growth most expected, did help. Back to back quarters of 0.6 may not be world beaters but it does show that the economy is growing and we have not fallen into a recession.
One of the major causes of the intrest rate drops is the budget deficit. As the US government stretches to borrow 400 Billion dollars it uses so much of the available funds that marginal interest rates increase which is why the Federal Reserve thinks it needs to lower rates as to make investment and capital inflows probable.
Currency is a weird subject. The lower value of the dollar has increased the global trading power of the US. Lower values make American exports more attractive abroad. The decrease in value does decrease the actual value of the assets of Americans.
Bernanke IS a problem.