If we were attending the Fed’s historic press conference tomorrow, here are the ten questions we would ask Chairman Bernanke:

1) Do you think the new monetary policy tool of the Federal Reserve of paying interest on reserves (IOR) is contradictory? That is, increasing the IOR rate is equivalent to a liquidity injection as the Federal Reserve makes more interest payments to banks. Will the markets think it credible that printing money (or turning over less surplus funds to the Treasury) to make these interest payments is really a tightening of monetary policy?

2) How much of the current oil price do you think is real and how much is speculation? And do you think the Fed’s zero interest rate policy (ZIRP) is having any impact on the price of commodities, especially food and oil?

3) You missed the housing bubble and misread systemic leverage so what do you fear today that you may be missing and getting wrong?

4) Was the recent tax cut extension, effectively financed by QE2 , equivalent to what you stated in your famous 2002 speech –“ A money-financed tax cut is essentially equivalent to Milton Friedman’s famous “helicopter drop” of money.”

5) Do you think Fed policy could be having a perverse impact on the economy as the dollar weakens, food and energy prices increase, causing real wages and consumption to fall leading to weaker economic growth and deflation in other goods and services?

6) Who do you think will step up and be the main buyer of Treasuries once QE2 ends?

7) Since the start of the millennium, why have real short-term interest rates been negative the majority of the time? Is there some fundamental flaw in the U.S. economy that necessitates this?

8) When will the Fed start rewarding savers rather than debtors and speculators?

9) Were you scared during the financial crisis, as Henry Paulson has admitted, and how close did the global economy come to the abyss? Please define abyss.

10) What do you think would have happened if the Fed had not taken the extraordinary steps it did during the financial crisis?

BR adds: I suspect the over-hyped press conference will be  “much ado about nothing . . . “


See also:
• Holding Bernanke Accountable (NYT)

• Bernanke’s Code: a Guide to Fed Chairman’s First Q&A (WSJ)

• Six Questions for Fed Chairman Ben Bernanke (MoJo)

• 20 Questions For Ben Bernanke (ZH)

Category: Federal Reserve, Financial Press, Fixed Income/Interest Rates

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

37 Responses to “10 Questions for Chairman Bernanke”

  1. Paul Brodsky says:

    Anyone in the room today?

    1. Long-established precedent shows that the Fed’s monetary posture, (i.e. restrictive or accommodative), correlates quite positively with its willingness to re-leverage or de-leverage the US economy. (In a credit-based economy, employment and price trends are a function of general access to credit and so the Fed eases when credit contracts and theoretically tightens when credit expands.) Should we presume then that the Fed’s first priority has become to keep the economy leveraged, and if so then should we expect the Fed to enter into further quantitative easing if the economy begins experiencing broad credit deterioration?

    2. If one is to quantify the magnitude of systemic leverage in the US economy it would seem the most accurate way of doing so would be aggregate debt divided by the US monetary base, which broadly speaking would demand we divide about $70 trillion in US dollar-denominated claims by about $2.5 trillion following the Fed’s latest round of Quantitative Easing. This implies the system is still levered about 28 to 1. So, rather than whether and when to withdraw the Fed’s recently digitized increase in bank reserves, shouldn’t the current monetary debate be about how much more money the Fed needs to manufacture to simply remain accommodative?

    3. In 2008, the Fed provided entities deemed “systemically critical” with newly-created monetary base. While loans were effectively made by Treasury to banking institutions that were subsequently paid back, banks continue to hold the newly-created money on their balance sheets in reserve and this has not proven to be economically stimulative. Wouldn’t it be more stimulative to distribute newly-created money to debtors, rather than creditors – especially since the markets are fearing inflationary consequences from a bank lending multiplier effect?

  2. Sechel says:

    It always seemed odd that the Fed introduced the policy of IOR at the apex of the credit crisis, the very moment in time that they were expected to increase their lending. The media never properly vetted this
    and the evidence is that reserves were not lent out but kept at the Fed.

  3. Greg0658 says:

    does ZIRP help laborers save for their end of muscle days or does ZIRP assist speculation ? which in turn helps grow the laborers market ? so does ZIRP create right headed speculation ? in America or the world ? for whos end of muscle days are we working for ?

  4. [...] 10 Questions for Chairman Bernanke [...]

  5. Petey Wheatstraw says:

    That the entire US/Global banking system is a sham and based on nothing so much as a facade of legitimacy concealing a core of criminality, renders moot any questions regarding policy. Questioning the Chairman of the Fed regarding monetary policy is the equivalent of questioning J. K. Rowling about the factual basis of her Harry Potter novels, or a religious organization about moral responsibility. Our banking system, like our erstwhile Republic, is cover for the power structure and nothing more. Bernanke will have an answer for everything — he will make it up, on the spot, because he can, and because it’s all he can do within the framework of fiction and deceit.

  6. Greg0658 says:

    to be perfectly clear .. ZIRP made savings accounts worthless and stock accounts the place to be .. 1 must pay back the principle+ and the other is speculation .. speculation requires more diligence and why there is a TBP .. so laborers there is no real storage any more – so whatayado

  7. Chief Tomahawk says:

    EXCELLENT questions, BR.

    But on this one “3) You missed the housing bubble and misread systemic leverage so what do you fear today that you may be missing and getting wrong?”, I’d like for a followup of Were you surprised you were nominated and approved for a second term has Fed head? And, how badly do you think you would’ve had to f*ck up to NOT be rewarded with a second term?

  8. royrogers says:

    I get the feeling BR will never be invited.

  9. wally says:

    Are you aware of any Fed policies to provide monetary stimulus that do not increase the wealth difference between the upper and middle classes in the US?
    If any such policies were available would you apply them?

  10. rktbrkr says:

    I don’t think it’s a healthy situation where a FED chairman has achieved rock star status.

    We all know that his answers are designed to say nothing controversial and if he does he will subsequently correct any “misinterpretations”, like he did with his contradictory comments about printing/not printing money.

  11. curbyourrisk says:

    This AssHat of a FED chairman would either bloviate any and all answers to such questions, LIE, or just take the 5th.

    REMOVE HIM NOW before he is allowed to do anymore harm. GET HIM AND GEITHNER OUT OF OFFICE ASAP.

  12. rktbrkr says:

    My question would be “can you provide any clear guidance about the likelihood of QEIII or conversely the withdrawal of 1.6T of earlier QE liquidity”?

    I’ve heard a couple gurus talking about a stealth QEIII to be applied as needed, that sounds likely to me but he has to get real serpentine with his answer.

    After going thru 1.6T and most stimuli and only a reduction to 8.8% unemployment (really 9.2% without the adjustments a few months ago) they are in a “don’t stand there, do something” posture.

    After bubbling up securities prices I think their focus should shift back to creating some wealth effect in real estate although they don’t have as easy a lever as with securities. I’d love to see all the underwater RE collateral they’re holding at above market valuations now for their bankster baddies

  13. Arequipa01 says:

    @Petey Wheatstraw

    mucho hígado…I share (and suspect others here do as well) your sentiments and notions about the futility of dialogue with the Fed (sounds kind of like the name of a gang of satiated cannibals, doesn’t it?). I do have a quibble though, lexical in nature.

    “Erstwhile Republic”. Allow me to suggest “Ersatz Republic” instead.

    Here’s my question for Bernanquirooney:

    What is it that Robert Gates won’t do that forced the ole Panetta shuffle?


  14. beaufou says:

    You have mentioned full employment in the past but the FED now seems to embrace the idea of a jobless recovery. You have showered banks, financial institutions, corporations and even CEOs spouses with easy money knowing they would not create jobs, is this a policy? and if it is, what exactly is your purpose for the economy as a whole?

  15. AHodge says:

    two additions might be
    1 did QE 2 also boost oil and commodity prices? (related to point 2)
    2would a hike in fed funds interest rates from zero to 0.5% or 1% be meaningful? slow the economy much? would it reduce the free money distortion and excesses in the financial markets?

  16. AHodge says:

    as for much ado
    the press can overall be as big a set of image trolls and posturers as the avg congressman.
    depends who they ask and any ground rules

  17. river says:

    Would love to see his response to question 5. This is coming from somebody who can’t afford french fries anymore.

  18. Richard12345 says:

    An answer to the oil speculation question would interest me a lot. Out of curiosity fellow denizens of the Internet does Barry Ritholtz have a blog post on this anywhere? I can’t see a search function anywhere on the site and I’m not going to hunt through the archives. Was reading the Taibbi book recently and if that’s accurate it kind of would make me angry, angrier. I’m just so filled with rage, or was it apathy? Anyway saw a similar thing about Grain in Harpers a few years back which kind of made me think probably not just journalist going insane. Would like to see what someone honest who is involved in that whole financial market thing like Barry thinks about it

    Link to that Harper’s article but unfortunatly subscriptions only http://www.harpers.org/archive/2010/07/0083022

  19. MorticiaA says:

    It WILL be much ado about nothing, and nothing will change with the possible exception that going forward, the main requirement for Fed chairs will be that they look good on television and who will read the provided script without flinching.

    Will the general public be more interested in the presser, or the President’s birth certificate?

  20. GrafSchweik says:

    Petey Wheatstraw — Dude, you need to start your own blog!

  21. Bill Wilson says:

    Great Questions. I’ve got a few.

    1) Do you think it is important to preserve moral hazard?

    2) What do you think the effect of TBTF institutions are on the marketplace. Do you think it is morally wrong for financial institutions to be TBTF.

    3) Why do think there have been so few prosecutions in the aftermath of the financial crisis? Do you think there wasn’t any criminal behavior? If there were more prosecutions, would that be a good thing or a bad thing for the economy?

  22. Richard12345 says:

    really? I have no clue what the content of his post was other than he’s angry and confused. Sure maybe I am too but at least I admit to confused. Well, I know you should ask the chairman of a central bank about monetary policy and to suggest that the chairman’s relationship to monetary policy is like an authors relationship to fiction is kind of insane unless you are John Searle talking about socially constructed reality but I’m guessing petey isn’t Searle and sounds instead like a conspiracy nut. just sayin

  23. Wait a minute. Did you call the Fed chairman a monetary policy tool?

  24. Richard12345 says:

    I dont think so but it is technically true if the markets respond to what the fed says its going to do. If the fed chairman says he is going to have the fed funds rate at 2% what do you think happens to the interbank rate even before the policy is enacted? rational expectations + rules based policy etc

  25. cognos says:

    Lame ?s. And kinda mean spirited.

    Seems like Bernanke is doing an excellent job. Back on path to growth. Trying to steady economy through deflationary spiral (housing).

  26. JohnnyVee says:

    Why Does Pluto Live in a dog house, eat dog food, etc. but Goofy, who is also a dog, lives in a condo and drives a car?

  27. Petey Wheatstraw says:


    In your two comments, above, you’ve admitted to being angry and confused. Project much?

    just sayin’.

  28. Richard12345 says:

    On closer reading you might notice I also mention apathy because I’m not actually angry but emotions aren’t relevant to anything. What is is that you make wild claims about conspiracies and say that its useless to ask the fed about monetary policy because what they have to say is either unbelievable or in some bizarre way fictional. But I guess that’s why that warning above the comments is there.

  29. Marc P says:

    The whole line of questions is a bit odd to me. Bernanke is a CEO of a private company that is owned by the banks and operated for the benefit of the banks. He has stated publicly and repeatedly that he and the Fed are not accountable to the American public in that he believes the Fed can make gifts of enormous gobs of money to his shareholders and friends and not only does he think he has no duty to tell the American people, he believes the American people do not have the right to ask questions.

    Bernanke, like his predecessor, knows it is part of his job to present the Kabuki theatre production of fallacious accountability, where he answers questions in serious tones for the consumption of the press but changes his course not a whit. When are Americans going to learn to look at actions rather than words? How does the composition of the question list make a difference?

    Here are Bernanke’s answers:

    1) The goal is to give them money. This meets the goal.

    2) I don’t care. That is not the concern of my shareholders.

    3) I misread nothing. My goals are simply different than yours.

    4) Yes. That is the point, you fools.

    5) The goal is to make money for my shareholders. They don’t worry about general price inflation because they can profit from it. In fact, if the dollar crashed tomorrow and treasury interest rates went to 12%, they would make a truckload of money shorting the rest of you.

    6) The Fed. We just won’t call it QE3.

    7) No flaw, only design.

    8) Why would the Fed want to reward savers and discourage speculators-with-ZIRP-borrowed-money?

    9) Sitting through those tedious hearings with those idiot Congressmen was frightening for a moment. I once had the fleeting thought they were going to grow some balls and actually legislate for a change.

    10) The world would have ended. You are luckly to have a man of my caliber willing to assist you since I could be happily tending my tulips in retirement, and I expect you to show more appreciation.

  30. Petey Wheatstraw says:

    Marc P:

    A+ to you.


    Dude, you sound angry as hell. You are also hallucinating something my comment did not say. If you want to believe the Fed is somehow being straight up, that’s your own trip. Why fuck with me?

  31. Richard12345 says:

    What are the goals of U.S. monetary policy?

    Monetary policy has two basic goals: to promote “maximum” sustainable output and employment and to promote “stable” prices. These goals are prescribed in a 1977 amendment to the Federal Reserve Act.


    Over the last 12 months, the median CPI rose 1.2%, the trimmed-mean CPI rose 1.5%, the CPI rose 2.7%, and the CPI less food and energy rose 1.2%


    though god knows Barry ritholtz has problems with their inflation measures

    “That the entire US/Global banking system is a sham and based on nothing so much as a facade of legitimacy concealing a core of criminality” + “Our banking system, like our erstwhile Republic, is cover for the power structure and nothing more. ” = wild ass conspiracy theory

    “Questioning the Chairman of the Fed regarding monetary policy is the equivalent of questioning J. K. Rowling about the factual basis of her Harry Potter novels” = bizarre claims about the significance of what the federal reserve chairman has to say.

  32. @JohnnyVee Says:
    April 27th, 2011 at 1:11 pm

    Why Does Pluto Live in a dog house, eat dog food, etc. but Goofy, who is also a dog, lives in a condo and drives a car?

    That’s simple. Because Pluto didn’t go to the right obedience schools

  33. JohnnyVee says:

    Got it. Thanks.

  34. kenny powers says:

    Can I have some of that delicious Liesman kool-aid “Cognos” and Richard-whatever are drinking?
    Must be some good strong shit.

  35. Arequipa01 says:

    “Bernanke also said the Fed’s decision to end its $600 billion bond-buying program is unlikely to significantly affect the nation’s economy or markets because the financial sector had already anticipated the move.”


    “See it will all be fine. No problems. Now I have go, there’s a monkey flying out my ass,” said with a toothy smile the Chairman of the Young Cannibals.

  36. ewmayer says:

    Guessing what the chairstain`s answers might be, were his evilness to deign to reply to such uncouth questions from the Great Unwashed:

    1) No.
    Could you rephrase as a question?
    That`s 2 questions, not 1.

    2) All and none.
    That`s 2 questions, not 1.

    3) Question starts with an assumption not in evidence. Please rephrase.

    4) No.

    5) No.

    6) U.S. Treasury markets are the deepest and most liquid in the world.

    7) We feel that the Fed`s accommodative monetary policies have been necessary due to an unprecedented confluence of market and world events in the past decade, none of which were in the least manner a consequence of our policies.
    That`s 2 questions, not 1.

    8) We feel that the Fed has supported savers by staving off a collapse of the financial markets. We really are doing God`s work here.

    9) Yes, I too found myself trembling in fear on several occasions. Sometimes I trembled alone, and sometimes I trembled together with the Treasury Secretary. [Again, That`s 2 questions, not 1, but I shall indulge you this once. Don't let it go to your head, sonny boy] We came Wile E. Coyote close, that is we were already over the edge, and only heroic interventions by the Treasury and Federal Reserve saved the day. Beep beep!

    10) We`ve all seen what happens to Wile E. Coyote without a strong, decisive central bank to support him in time of crisis. I don’t recall the specific sound effects for that one, but it’s … not pleasant.

    At this time, those who wish to do so may form a line to receive the Chairstain`s blessing and kiss the ring.