Bernanke's acceptance

I don't know how Ben Bernanke pictures the way future historians will look at his "legacy". The Princeton professor came to the helm of the Federal Reserve surrounded by his aura of expertise in the Great Depression of the 30s. He promised that the US Central Bank would not repeat the mistakes of its predecessors in those times.

Perhaps that is the reason why the chairman of the Fed surprised the market with his announcement that he would continue the program of printing money in all its splendor of 85 billion dollars a month.

To Ambrose Evans- Pritchard of The Telegraph, Bernanke's decision meant "avoiding the big mistake of 1937, when the Fed prematurely tightened the monetary policy". Unfortunately, Evans-Pritchard forgets that the president of the Federal Reserve has made a much bigger mistake: maintaining the ultra-lax monetary policies, in order to "cover-up" the responsibility of the US Central Bank for feeding the speculative bubble which existed prior to the beginning of the global crisis.

Did Bernanke really learn anything from the lessons of the Great Depression? It would appear he didn't, and that will be his true legacy, aside from the economic disaster he leaves behind.

Bill Fleckenstein, president of investment fund Fleckenstein Capital, said for King World News that the economic and financial situation of 2013 does not even allow the Fed to cut its stimulus program, even though the Central Bank of the United States was speaking, since back in 2009, about "exit strategies" for the program. "The Fed is completely trapped", Fleckenstein also said, who expects the "central bank will lose control over the market for government bonds".

An article by Bloomberg noted that "Ben Bernanke has consolidated his position as the most militant head of the Fed through his inaction at the last monetary policy meeting", and in doing so, "he has bought more time for the emerging markets, from Brazil to India".

Most critics feel that Bernanke did nothing else but postpone the moment of truth.

But Bernanke's decision can not even remotely be considered a proof of his "activism". Rather, it is an acceptance of the economic hurricane that has intensified its assault against the "castle with paper walls", built to "protect" the American economy.

The press release of the Federal Reserve states that the "FOMC (a. note: The Monetary Policy Committee) has decided to wait for more evidence of the sustainability of progress before adjusting the pace of the purchases".

Progress? How does Federal Reserve measure economic progress? In the five years that have elapsed since the bankruptcy of Lehman Brothers, the balance sheet of the Fed has increased 3.6 times, to 3.66 trillion dollars, whereas the number of employees in the economy has decreased by 0.2%

It is true that the unemployment rate has fallen to 7.3% in August 2013, from 10% in October 2009, but this "achievement" was only possible because the number of people that are not part of the workforce increased by over 10 million, amid an increase of the total population by 11.2 million, and by 1.2 million of the workforce.

The maintaining of the downward trend of the real revenues has led to an explosive increase, with the latest data of the Department of Agriculture showing that their number has exceeded 46 million in 2013, after an increase of almost 20 million in the last five year. The situation has come to the point where over 20% of the American households depend on government food aids to survive.

So it can be said that the divergence between "the performance" of printing money and that of the real economy has never been greater.

So then why does the Fed continue printing? For two reasons: to cover-up of the default of the public finance system and supporting the banking system. And these two reasons guarantee the "funneling" of the real assets, what is left of them, towards the first beneficiaries of the "money" being created out of thin air.

One day before the announcement of the decision to keep the quantitative easing program unchanged, the Secretary of the US Treasury was saying, before the Economic Club of Washing­ton, that "we are relying on investors all over the world buying our bonds".

"Every Thursday we refinance government bonds of about 100 billion dollars. If investors decide to request repayment instead of refinancing, we could unexpectedly see that all of our cash has vanished", Jack Lew went on to say.

President Obama chose to ignore this inconvenient truth, in a speech before the executives of the largest American companies, by saying that "the raising of the debt ceiling does not lead to the increase of the debt". I wonder what would he have said about the aforementioned "vision" on said debt?

By maintaining the quantitative easing at its monthly amount of 85 billion dollars, Ben Bernanke may have bought some time. Or perhaps it's just acceptance and he didn't want to rock the boat before his "retirement".

Stanley Druckenmiller, a former partner of George Soros, said, after the decision of the FOMC, that the "Federal Reserve has missed out on a huge occasion to get us off the dependence of narcotics, as the market expectations were focused on the tapering of the quantitative easing program. We are still looking at "the largest wealth redistribution from the middle class to the rich, in history", said Druckenmiller in a show by NBC.

And thus, Bernanke will have made sure that nobody can steal his legacy, because everyone will be too busy trying to save anything from the ruins.