Ben Bernanke

Yellen Sworn in as Bernanke Ends Term With Fed Taper

By on 2.4.14 | 11:08AM

Janet Yellen was sworn in yesterday as the fifteenth chair and first woman to head the Federal Reserve. She replaced Ben Bernanke, who presided over his final session during last week’s meeting of the Federal Open Market Committee (FOMC). The Fed announced after that meeting that it would once again taper its monthly asset purchases. Yellen’s installation and the continuation of tapering indicate that Bernanke’s retirement is not the end of an era or an unprecedented turn, but rather business as usual at the central bank.

At the Fed’s January 28-29 meeting, the FOMC announced that it will reduce the scale of quantitative easing. The reduction in asset purchases is $10 billion, bringing the monthly total down from $75 billion to $65 billion. The last reduction was announced during the Fed’s December meeting in 2013, and markets reacted positively. This announcement, however, came on the heels of a bad week for equity markets.

The Fed’s Taperwork

By on 12.18.13 | 4:58PM

The Federal Reserve Board of Governors announced today that they would begin a taper of monthly bond purchases made as part of quantitative easing policy. The taper, or reduction, is slight—a decrease in monthly asset purchases from $85 billion to $75 billion, or a little more than 10 percent, which would begin in January.

While some analysts did not expect the Federal Reserve to taper any time in the near future,  there were hints in Janet Yellen’s testimony before the Senate Banking Committee last month that the Fed was pleased with progress they perceived in the economic indicators they used to determine whether to scale back on asset purchases. Recent jobs numbers were probably one of the major indicators the Fed relied upon in their decision.

Fearless Predictions: Taxpayers Make a Killing

By on 9.25.08 | 12:14PM

John Berlau suggests that mark-to-market accounting is partly responsible for the current financial meltdown because it forced banks to write down their assets even if they really weren't worth any less if held to maturity.

Hank Paulson and Ben Bernanke believe that another Resolution Trust Corporation, armed with a $700 billion line of credit from the U.S. taxpayer, could resolve this crisis using market principles -- reverse auctions for distressed assets, most likely.

Now Hank Paulson, formerly of Goldman Sachs, knows full well that the beauty of the market is that if you see an opportunity, you can make a profit. If mortgage-backed securities are currently undervalued due to some arcane accounting rule, you can bet that Paulson and Co. are all too ready to pounce. Taxpayers, get ready to profit.

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Bernanke Still Wrong

By on 8.22.08 | 4:45PM

Again today, Fed Reserve Chairman Ben Bernanke sounded like a dove in terms of willingness to really fight inflation. I repeat what I have written numerous times before that the Fed approaches all of this all wrong when it manipulates interest rates rather than targets a steady dollar (through other means at its disposal). In the long run, I would NOT advertise a significant rate hike, therefore, or for that matter ANY particular effort by the Fed to set interest rates. The rates should float. That said, in the short run, if the Fed is indeed to keep using the interest rate manipulation model that it has used for the past few decades, it will be making a huge mistake if it keeps interest rates way down at 2 percent while inflation rampages. I still believe that if he becamse hawkish vs inflation now, while he still can, by doing one quick rate hike to 2.5 percent, it would send such a signal to the markets that the Fed will keep inflation in check that lending institutions would, counterintuitively, being cutting long-term mortgage rates. I explained this to a greater degree in an earlier post I do not have time to dig up.

Again, Bernanke Must Go

By on 6.30.08 | 1:48PM

Commodity prices are a monetary phenomenon. The price of oil keeps going up. Yet Ben Bernanke still won't do anything serious to strengthen the dollar. Again and again I and many others have been warning for month after month that "Stagflation could make its ugly face obvious as early as this summer." Now it is just about here. And it's the fault of the Fed and the Treasury, along with a political class that keeps approving huge spending while failing to ensure that current low tax rates will remain low. And now things are getting really awful. Since Ben Bernanke and the Fed refused last week to back up Bernanke's "strong dollar" talk, from a few weeks earlier, with any actual discernible action, the stock market has tanked even further, horrendously so, while oil and gold have jumped even more. Bernanke is incompetent. Bush can't fire him, but he should ask for the Fed Chief's resignation, in favor of somebody who will actually protect the dollar.