‘Banana Ben’ Bernanke TIME’s ‘2009 Person of Year’

The issue of TIME scheduled to hit newsstands Friday is described in a news release today as the "most anticipated issue of the year." Why? Because it features Federal Reserve Chairman Ben Bernanke on the cover as the magazine's "2009 Person of the Year."

"'Helicopter Ben'" Bernanke by My Personal Litmus

Come again?

Why on earth would the folks at TIME select Bernanke -- a man described in the magazine's already-published online version of their story as a "bald man with a gray beard and tired eyes" -- as their "Person of the Year"?

I suspect it's because they're in the tank for everything related to President Barack Obama and the people he's charged with righting the nation's economy -- or, at a minimum, pretending to be focused on that goal.

This is not Bernanke's first appearance at or near the top of a liberal's list of powerful and/or influential people.

In November 2006, former Clinton Labor Secretary Robert Reich placed the 56-year-old fourth on his short list of "most powerful Americans over the next 18 months." Pardon me, but I couldn't resist using the term "short list" to describe Reich's offering and using the "View Full Size" image (right) of Reich.

Likewise, this is not Bernanke's first appearance on this blog.

In March, I shared the following observations in a post about the Fed chairman:

Ben Bernanke earned the nickname “Helicopter Ben” for comments he made in a November 2002 speech, Deflation: Making Sure “It” Doesn’t Happen Here, delivered at the National Economists Club in Washington, D.C. More than six years later, some are wont to apply a new nickname, “Banana Ben,” to the Federal Reserve chairman.

He has earned the new name, writes Michael Pento at his FXStreet.com, because of his desire to make the United States resemble a banana republic instead of embracing the policies that made the U.S. the greatest nation on earth.

It is now abundantly clear to all that not only the Fed Chairman but also this administration will do everything in their power to create inflation, he continues. Their efforts are derived from the mistaken belief that inflation can solve everything.

Most important among Pento’s observations, however, are those that appear below, aimed at President Barack Obama:

Further, what might surprise the new President—allegedly a champion of the poor—is that an increased supply of money is never evenly distributed throughout the economy; it always finds a home with the nation’s most wealthy citizens who have access to credit first. Skyrocketing prices relegate the middle and lower classes to use all their available funds for the basic necessities of life. Since the demand for discretionary purchases collapses, unemployment rates explode and the economy is left in shambles.

Now, I'll end this post the same way I ended the one in March: Welcome to the “Land of ‘Hope and Change.’”

From Ben’s November 2002 speech, Deflation: Making Sure “It” Doesn’t Happen Here...

The conclusion that deflation is always reversible under a fiat money system follows from basic economic reasoning. A little parable may prove useful: Today an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject’s oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days. What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.

What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

Of course, the U.S. government is not going to print money and distribute it willy-nilly...

(what a con-man.)

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