Worse Off in a “Better Than” Economy

Yesterday we examined Bernanke's dishonesty; today we'll examine his insanity.

If the definition of "insanity" is, as Albert Einstein asserted, "doing the same thing over and over and expecting a different result," Federal Reserve Chairman Ben Bernanke is insane. And if he is insane, he deserves our pity, rather than our scorn.

Therefore, your editors here at The Daily Reckoning pity the Federal Reserve Chairman…poor ol' "Crazy Ben." They also pity the rest of the folks on the Federal Open Market Committee who repeatedly endorse Crazy Ben's failing tactics.

After several years of pursuing "nontraditional policy tools," as Chairman Bernanke described them in his speech last week at Jackson Hole, the US economy continues to exhibit a nontraditional lethargy.

Nevertheless, Crazy Ben credits his non-traditional — we call them "wacky" — tools for making the economy stronger than it would otherwise have been. And if the economy doesn't improve soon, Ben promises to do more of what hasn't worked.

In simple English, Bernanke's non-traditional policy tools consist of manipulating and/or "communicating" his intention to do so. [Other tools include clandestine market manipulations that do not make their way into the minutes of FOMC meetings or the transcript of Jackson Hole addresses].

"Now, with several years of experience with nontraditional policies both in the United States and in other advanced economies," the Chairman explained last week at Jackson Hole, "we know more about how such policies work. It seems clear, based on this experience, that such policies can be effective, and that, in their absence, the 2007-09 recession would have been deeper and the current recovery would have been slower than has actually occurred…"

The Chairman even goes so far as to put hard numbers on the "better than" economy he claims to have produced.

So there you have it; the US economy is better by three percentage points of growth and by 2 million jobs, thanks to the fact that Bernanke printed $2 trillion and used the funds to purchase distressed bonds from Wall Street banks.

Even if we were to accept Bernanke's guesses as Gospel, the results would be pathetic. In round numbers, Bernanke printed up dollars equivalent to about 15% of GDP and, therefore, enabled the nation's GDP to grow by 3%.

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More: http://www.businessinsider.com/worse-off-in-a-better-than-economy-2012-9