The Curious Case of Benjamin Bernanke


It seems impolite to ask, what with employment growth sucking wind already. Companies added just around 100,000 jobs a month over the past year, a rate Fed chief Ben Bernanke dismissed Friday as “insufficient to materially reduce the unemployment rate.”


That’s the jobs picture right now, according to Fortune and the Fed. But wait — there’s less:

But it gets worse. Economists at Bank of America Merrill Lynch say one key to a jobs recovery is an improvement in housing — because so much job creation is driven by new businesses that have in recent years been financed in part by home equity borrowing.

This is — er, that was — the “wealth effect” that Fed Chairman Ben Bernanke is purposely trying to recreate by pumping imaginary dollars into the equities markets. People will feel richer, just like they did with ever-increasing home prices. Until, of course, the air lets out or the bubble pops or the bottom drops out or whatever financial disaster metaphor you’re most uncomfortable with.

To put it more simply, the Fed plan is to save us from the housing bubble by giving us an equity bubble.


As with all economic news, there’s good and bad. The good news is, Americans are being smart and paying down debt; there’s less likely to be a wealth effect than a slightly-less-endebted effect. In other words, we might have gotten too wise to blow that bubble. The bad news is, the Fed might just try ever harder, leaving us with a very nasty inflation spike down the road.

But by all means, keep pushing that string, Ben.


Trending on PJ Media Videos

Join the conversation as a VIP Member