From the WSJ:
Rep. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services Committee, accused Republicans on Monday of siding with Chinese central bankers in their attacks on the U.S. Federal Reserve.
“The Republicans are joining the Central Bank of China in criticizing [Fed Chairman] Ben Bernanke,” Mr. Frank said Monday during an interview on Bloomberg Television. “This is really distressing to me.”
Mr. Frank was defending this month’s decision by the Fed’s policy committee, the Federal Open Market Committee, to buy as much as $600 billion in Treasury debt, a move that has been criticized by central bankers in other countries.
“I wish we had more fiscal stimulus,” Mr. Frank said. “In the absence of that, given inflation, (Mr. Bernanke) is doing a very reasonable thing.”
Frank's comments come at a time when Republicans are increasingly questioning Bernanke's QE. In a letter to Bernanke, prominent Republicans including Senator Mitch McConnell, soon to be Speaker of the House John Boehner, Senator Jon Kyl, and Congressman Eric Cantor wrote:
...we write to express our deep concerns over the recent announcement that the Federal Reserve will purchase additional U.S. Treasury bonds, the so-called Quantitative Easing 2 (QE2). While intended to improve the short-term growth of the U.S. economy and help maintain a stable price level, such a measure introduces significant uncertainty regarding the future strength of the dollar and could result both in hard-to-control, long-term inflation and potentially generate artificial asset bubbles that could cause further economic disruptions.
The Federal Reserve’s recent move has also generated increased criticism and action from other central banks and governments. We appreciate that such comments must be examined within the context of which they have been offered. However, any action taken by our nation or foreign nations that impairs U.S. trade relations at a time when we should be fighting global trade protection measures will only further harm the global economy and could delay recovery in the United States.
Perhaps most damaging, we believe that QE2 is giving the impression that the Federal Reserve will keep making new and different attempts to boost the short-term prospects for the economy. Our long-term growth depends on restoring confidence and certainty in our fiscal, regulatory, and trade policies — and not on government’s willingness to engage in additional stimulative measures. When asset prices increase due to anticipated Federal Reserve policy rather than economic fundamentals, it increases the potential for speculative action and erodes confidence in the economic outlook, making it more difficult to generate sustainable growth.
Bernanke is definitely on the defense and has been forced to defend his actions in recent speeches. His troubles will worsen when Congressman Ron Paul becomes Chairman of the Sub-Committee on Monetary Policy. No longer will Bernanke simply get a pass when it comes to his many crimes. Ron Paul will publicly expose the Fed for debasing the dollar and bankrupting the middle class through inflation. I hope Ron Paul uses Congress' subpoena power to force the Fed to release the bailout documents. That would really be the end for the Fed, because it has always been able to conceal its crimes from the public. But public exposure would increase the pressure on the Fed and could lead to Bernanke's resignation.
Black Swan Insights
The frankster
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