Four years before he became chairman of the Federal Reserve, Benjamin Bernanke (then “merely” a Fed Governor), gave a speech commemorating the 90th birthday of Milton Friedman.
Below is his concluding statement:
Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.
This goes up on the mantel next to Greenspan’s essay lauding the Gold Standard.
More on the Fed (1-4570). Via Coyote Blog
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But Tim, as Mat stated in his article not that long ago, Bernanke agrees with Friedman’s view that the Fed Reserve caused the Great Depression to start by not acting to reinflate prices in the face of price deflation. This is very different from the Austrian view that the Fed Reserve made it virtually inevitable (caused) the Great Depression to begin when it was busy inflating the money supply throughout the 1920s.
The scary as hell part of the quote is “But thanks to you, we won’t do it again.”
Translation: we can expect a hyper-inflationary great depression instead of a deflationary great depression in the next few years. Gee, thanks a lot!
On the bright side, at least we can expect a return to gold as a currency soon. God help us with the transition.
OFN…
At least he’s sory…
Right, Tim. MF’s point was that the Fed didn’t inflate enough, soon enough. They will never make that mistake again!
This is like Stalin apologizing for not having cracked down on landowners enough: this is NOT praiseworthy contrition.
I disagree with the statement that the Fed caused the Great Depression. The Hoover and Rosevelt administrations passed tariffs and other laws that really stuck it to business. I think Ben B. knows this as well but it does not fit with the inflation first mentality of the Federal Reserve.
Yes Milton and Anna, we will ignore the extremely different response that the Federal Reserve and the federal government had to the economic downturn of 1920-1921, and what this should teach us about how the government should “respond†to a downturn.
And yes Milton and Anna, we will ignore the fact that since the creation of the Federal Reserve in 1913 the purchasing power of the dollar is currently approximately one nickel, especially considering that in the 18th and 19th centuries prices were stable or by some measures declined.
Oh yes Milton and Anna, we have done such a great job, and by recognizing your wisdom we will do even a better one!
Interesting option to consider…lets all go massively into fixed rate debt while we still can..and buy gold and silver with our borrowed greenbacks..then let the dogs of war and the economists of doom do their worst…we can sit back and repay our loans when all is said and done for pennies on the (new) dollar and be wealthy beyond our dreams…why not use the coming economic disaster as a “golden” moment to get rich off of the situation..I see no way our nation can escape massive inflation or hyperinflation…By the way, check your new Social Security statements…they have changed how they calculate your benefit quietly..it is now based on an AVERAGE of all of your salaries..not on the highest quarters you worked..this way they can inflate themselves out of actually increasing the benefits or paying the benefits that were promised to the American people..how much more can we take…
You only get into Bernanke’s position by openly disregarding every law of economics.
I’ve said it before, but I hate Bernanke. The way he subjects people to his ignorance is practically malicious. I want to see him arrested, sentenced, and then publicly tarred and feathered for his role as counterfeiter-in-chief.
Angelo said, “I want to see him arrested, sentenced, and then publicly tarred and feathered for his role as counterfeiter-in-chief.”
Actually it can be argued that him and Greenspan are directly responsible financially ruining the lives of countless millions of people. I think that qualifies as a crime against humanity. They need to have a noose around their neck.
Mike,
I’ve made the same argument elsewhere and believe that the government (without saying so, of course) is all but begging people to take out home equity loans for this purpose.
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