...it was bound to happen. A second article on Ben Bernanke. This time on the remaining options he has to counter the downbound train called economy.
This time the article featured Ben's three remaining options:
1) Turn on (or speed up) the moneypress
2) Be irresponsible
3) Play Governement
1) Turn on (or speed up) the money press
Ben pressed 600 billion dollars before, bought 2 trillion dollars worth of mortgages and bonds. It didn't help the economy in a structural way. Why should it help now?
2) Be irresponsible
If you are up to your eyeballs in debt it's best to choose for inflation. When money is worth less so will your debts. (But Ben froze the interest rate until 2013 so he kind of shot himself in the foot with this one).
3) Play Governement
The 1930's proved that a direct investment (skipping the banks who would only use the money to polish their financial statements) might be a good idea but only if it is combined with structural reforms of the economy (housing, workforce and government spending)
Ben is F-ed on all three accounts.
The Europeans have been trying to encounter the economic downfall almost similar. The ECB also bought state bonds from the economically weak countries at an alarming rate (without success)
What's next? The Alphaville-blog of the Financial Times suggested that Bernanke should "believe in the Force [inflation]. If you believe it strong enough it will happen......"
Off course this was meant to be a joke but it illustrates the enormous task that lies ahead. It needs a magician to perform the economic miracle.
