Isn't it Good That We Have Ben Bernanke?
Mr. Zamasiya wrote (among other things) that in 2002, when the head of the central bank was replaced by someone who had no economic education, credentials, or other qualifications, that the inflation rate jumped from 200 to 600% per year. One might wonder why this would happen.
Answer: Apparent loss of central bank independence. With an "economist" at the helm of the central bank, at least there is the appearance of independence for the central bank. But once the façade has been dispensed with, and the new governor is clearly a lackey, the central bank is seen for what it is—a stooge of the government, a government in desperate need of more money.
Imagine what would happen if, in the United States, Ben Bernanke were replaced by someone who didn't sound like he knew what he was talking about!
- The stock markets might gyrate hundreds of points in a week;
- The housing market might collapse;
- Banks might need capital infusions;
- Major brokerage firms might declare bankruptcy or be bailed out at the last second;
- Inflation rates might triple;
- The dollar might sink against other currencies (except the Zimbabwe dollar);
- Commodities prices might soar, reaching all-time highs;
- Foreign entities might stop purchasing U.S. Treasury Securities;
- Some commodities historically sold in U.S. dollars might be sold in currencies other than the U.S. dollar;
- The Federal Reserve Bank might have to lower its lending standards and accept sub-prime debt as collateral.
I guess it’s a good thing we have Ben Bernanke!
Robert Jackson Smith