Bernanke is No Expert
Federal Reserve Chairman Ben S. Bernanke is no expert on the Depression because he missed the part where the federal government through the Federal Reserve created the Depression in the first place. The 1920s boom was created by the monetary policies of the Federal Reserve. The 1929 bust or crash, was also the result of Federal Reserve policy.
A real expert on the Depression is former Federal Reserve Chairman Alan Greenspan. He explains in his article “Gold and Economic Freedom” (available in my book “Why Gold?”), “When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage.” To lower interest rates the Fed “pumped excessive paper reserves into American banks.” The excess credit “spilled over into the stock market–triggering a fantastic speculative boom. Belatedly, the Federal Reserve officials attempted to sop up the excess reserves …but it was too late…the American economy collapsed.” Then it was necessary to go as far down the road of depression as they had advanced on that of credit expansion. “The Great Depression should have signaled that something was basically wrong with a system that permits such a catastrophe to occur at all.”
Bernanke is taking the reason for the Federal Reserve which was created in 1913 as accurate, i.e., if credit were non-stop there would be no depressions. Perhaps if Bernanke were also a student of Henry Hazlitt and Ludwig von Mises, he would understand sound economics. Today, Bernanke and the Fed are trying to keep the U.S. economy afloat on credit. Instead they are drowning everyone in U.S. dollars, forcing down interest rates instead of letting the marketplace adjust interest rates as necessary for a healthy economy, and causing all prices and costs to rise. If they continue their course, which Bernanke claims they will for another two years, prices will continue to rise, the dollar depreciate, and the inevitable bust will be deeper and longer than the Great Depression.
Bernanke is no expert on the Depression, on the way the Federal Reserve affects the economy, nor on the results of his current monetary policy. All one has to do is look at the price of gold. It is signalling much higher prices in the future. It is saying the Federal Reserve and the U.S. government are out of control. They are destroying the purchasing power of the dollar. Worldwide people are fleeing dollars for gold, irregardless of what Bernanke believes.
