Fed head Ben Bernanke got hammered during his reconfirmation hearing in front of the Senate Banking Committee this week. Jim Bunning was Bernanke’s toughest critic, followed by Richard Shelby, Jim DeMint, and yes, Chris Dodd, the beleaguered committee chair who in all likelihood will be defeated in Connecticut next year.
In fact, Sen. DeMint has put the Bernanke confirmation floor vote on hold until the Senate votes on the Federal Reserve Sunshine Act of 2009, which would allow for a GAO audit of all Fed lending and Open Market Committee (FOMC) policies.
By the way, it now takes five years for the full content of the FOMC policy meetings to be released, and the GAO audit would reduce this to six months. That would still leave the central bank independent, but it would certainly give taxpayers a clearer picture of the central bank’s operations. And why shouldn’t Bernanke hold a press conference directly after the Fed policy meetings, just like Jean Claude Trichet does after the European Central Bank meetings?
A little sunshine certainly wouldn’t hurt Bernanke’s approval ratings. According to a new Rasmussen poll, only 21 percent of voters favor Bernanke’s reappointment as Fed chairman, while 41 percent think President Obama should name someone new to the post.
But back to the hearings. It was unfortunate that not one of the committee senators directly asked Ben Bernanke why the gold price recently surged to around $1,200, and what that might mean for future inflation and the U.S. economy.
The Wall Street Journal editorialized this week that while the Fed chair knows how to ease money, there’s no evidence during his tenure (or while he was Alan Greenspan’s copilot) that he knows how to make money sufficiently scarce in order to protect the dollar and prevent inflation. (Echoing the polls, the Journal editors concluded that “the country needs a new Fed chief.”)
Surely the steadily depreciating dollar and the surging gold price are bad omens for the future economy. In fact, inflation rates have been edging higher in recent months and will likely continue upward in the months ahead. Import prices channeled through the weak dollar have been rising. So while many of us hoped the Fed chair would address the gold question, he never did.