♠ Posted by Emmanuel in Cheneynomics at 1/23/2010 03:54:00 PMAt the risk of a dressing down from Gavin Kennedy, Adam Smith would get rid of B-B-B-Bennie of the Feds straight away and get another Fed chief. As you probably know, Bernanke's renomination as Federal Reserve chairman is being subject to political football at the moment. See the Financial Times and the Wall Street Journal for more. While there is some argument as to what would happen in the event that his renomination does not run into procedural tussles by garnering less than sixty votes in the US Senate--will he be forced to step down as head of the FOMC or not--this much is clear: his renomination is not a sure thing as discipline on the Democratic aisle is breaking down, with elections looming and a president losing popularity.
Let us return to one of Smith's most quoted statements:
It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.While naive readings of this statement (think Chicago School) believe it to be an argument for selfishness, an interpretation more consistent with Smith's prior works suggests otherwise. This more nuanced argument is profoundly others-centred. In contemporary vocabulary, we do not beggar-thy-neighbour during transactions by trying to sucker them into a bum deal. We should think, "how can we offer our neighbours a fair deal ?"...one that meets with approval in the eyes of the impartial spectator?
Contrast an informed reading of the butcher-brewer-baker metaphor with modern America featuring Bernanke at the helm. Thus guy tries to give America's counterparties a raw deal at every turn--helicopter dropping money, buying up junk securities that foul up the Fed's balance sheet, reducing returns to a pittance via near-zero interest rate policy and so forth. Bernanke best symbolizes the moral turpitude of modern America embodying those hallmarks of "kick the can down the road" and "give your partners a raw deal."
As an unfortunate dollar holder still, I hold Bernanke in utter contempt. If America wants to salvage any decency in the eyes of the rest of the world, it should appoint someone else as Fed chief, pronto. And, of course, we're not talking about Larry "Wooden Racquets" Summers here. When your country is the laughingstock of your biggest creditors, I think it's time for some deep reflection on what has caused you to be held in such low regard.