On Friday, Federal Reserve chairman Ben Bernanke gave a speech claiming that the economy is finally headed on the right track. He stated at the Federal Reserve Bank of Kansas City’s annual economic symposium that “despite this recent slowing, however, it is reasonable to expect some pickup in growth in 2011 and in subsequent years.”
Not so fast. It has become apparent that Ben Bernanke’s economic forecasts are rarely ever correct. Here are just a few quotes showing Ben Bernanke’s oblivion to the looming housing crisis from 2005 to 2007:
July 2005: CNBC announcer Maria Bartiromo: We have so many economists coming on our air and saying oh this is a [housing] bubble and it’s going to burst and this is going to be a real issue for the economy. Some say it could even create a recession at some point. What is the worst case scenario?
Ben Bernanke: I guess I don’t buy your premise. It’s a pretty unlikely possibility… I don’t think it’s going to drive the economy too far from its full employment path though…I’m hopeful and I’m confident in fact that the bank regulators will pay close attention to the kind of loans that are being made and making sure underwriting is done right.
Ben Bernanke, February 2007: Our assessment is that there is not that much indication at this point that sublime mortgage issues have spread into the broader mortgage market which still seems to be healthy and the lending side of that still seems to be healthy.
Ben Bernanke, July 2007: Overall, the US economy appears likely to expand at a moderate pace over the second half of 2007 with growth then strengthening a bit in 2008 to a rate close to the economy’s underlying trend.
Despite Ben Bernanke declaring that the recession was very likely over in September 2009, the recession is far from over and will likely get even worse in 2011. One has to question why the Federal Reserve’s economic forecasts were so wrong. What exactly is the central banking system doing behind closed doors? How large of a part did the Federal Reserve play in the current financial crisis?
Fortunately, the momentum for a true audit of the Federal Reserve is growing. In May, the latest Rasmussen Report shows that 80 percent of Americans support auditing the Fed. The powerful Ben Bernanke opposes such an audit claiming that “making judgments about our policy decisions would effectively be a takeover of policy by the Congress.” Ultimately, the American people should be allowed to make judgments regarding the risks that the Fed took with taxpayers’ money. As the movement for Fed transparency and accountability grows, Ben Bernanke has made every possible effort to hide secretive financial documents.
Late Bloomberg News reporter Mitt Pittman requested documents through the Freedom of Information Act (FOIA) pertaining to the Fed’s $2 trillion U.S Loan Program. Despite appeals by the Fed, the court upheld that the Federal Reserve was required to release 231 documents detailing loans to financial firms in 2008. The Fed alleges that disclosing which banks received taxpayer bailouts would stigmatize and hurt borrowing banks by causing “severe and irreparable competitive injury.” The secretive Fed’s message is clear: they would rather protect the secrecy of banks than inform taxpayers on where their money goes.
On Friday, the U.S. Court of Appeals granted the Federal Reserve a 60-day delay to disclose of the court-ordered documents revealing these bailouts made during the financial crisis. The delay which is 30 days shorter than the Fed requested, gives them time to decide whether or not to take their case to the Supreme Court. It’s unfortunate that the court decided to give the Fed more time to hide documents that undeniably should be publicly accessible through the FOIA.
Since the Federal Reserve has likely played a major role in the current financial meltdown, it is dangerous for the central bank to have unchecked power. The Federal Reserve continuously ignored wise advice by Austrian (free market) economists by creating a housing bubble through artificially lowering interest rates and recklessly loaning money to banks that deserved to fail. Let us not ignore Thomas Jefferson’s words:
Banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.
Despite the Federal Reserve’s escalated efforts to conceal important documents, the vast majority of Americans support removing the Fed’s cloak of secrecy. Please contact your representatives and tell them to support Ron Paul’s Federal Reserve Transparency Act which will remove all of the Fed’s special audit protections.