Some Musings on Bernanke and the Federal Reserve

It is hard to imagine more idiotic and reckless words ever being uttered than these:" ... No low risk, low cost, incremental monetary tightening exists that can reliably deflate a bubble. But is there some policy that can at least limit the size of a bubble, and hence, its destructive fallout? From the evidence to date, the answer appears to be no."- Alan Greenspan, 2002 Jackson Hole SymposiumI truly believe that sentence captures the failure of the Greenspan era, both economically and morally.The Federal Reserve chairman ought to be one of the most unpopular people on the planet, if he is doing his job well. If Jim Cramer is praising you, you are probably encouraging moral hazard and participating in some sort of insidious central banking practice. My prayer for the second term of Ben Bernanke is that he will re-read the great Milton Friedman works on sound money, will be willing to act like Paul Volcker, and will go to therapy if need be to avoid the narcissism that Alan Greenspan suffered/suffers from.Bernanke-haters do not understand what the likely alternative would be under this administration. If one were to understand what the central bank would look like if Obama were to pick his own man, unfettered by external circumstances, we would be horrified at the idea of replacing Bernanke. The present Fed chief has some Milton Friedman in him. Will a second term Bernanke have the guts to tell Congress that his monetary policy can only work if their fiscal policy is reversed? Pray that it be so.Those decrying the increase in the money supply rather than the lack of spending restraint by Congress, and the fact that Obama intends to let the Bush tax cuts expire next year, do not have their priorities straight. Bernanke promised Milton Friedman that "they [the central bank] would not let it [the depression] happen again." May he exert the right influence over the variables that he can not control, so that the heroic Milton Friedman will not have to spin in his grave.Inflation is avoidable. Does the political will exist to prove me right? And does the Fed chairman have the guts? Time will tell.In the meantime, I am growing more and more enthused by the idea of an 11-year old computer genius running the Fed. I can guarantee you that he would never say anything as stupid as what Greenspan said above.