“For Better” . . . For Now
“The person, group, idea or object that for better or for worse . . . has done the most to influence the events of the year.”
–Time magazine’s criteria for selecting its “Person of the Year.”
My selection for 2013 person of the year is Federal Reserve Chair Ben Bernanke.
I chose Mr. Bernanke not because I approve of his polic(ies) — I don’t — but because the Fed’s role stimulating the stock market and broader economy (including housing) is undeniably the year’s big story, at least financially.
Flip Side of the ($5 Trillion) Coin
Critics such as myself level two charges against Mr. Bernanke:
One. His policy of Quantitative Easing — essentially, opening the monetary floodgates and inundating the system with liquidity — forestalls the kind of fundamental reform that should have occurred in the wake of The Crash of 2008.
Indeed, still needs to happen.
So, just like then, today’s economy is dominated by Too Big to Fail financial institutions, opaque credit derivatives — and a political system controlled by people friendly to such interests (if not one and the same: witness former Goldman Sachs Chief and Treasury Secretary Henry Paulson and a slew of other Wall Street – Washington types).
Two. Flooding the system with cash introduces unknown risks, distortions and side effects.
Exhibit A: “bubblicious” stocks like Twitter, trading at a gazillion times sales (never mind earnings).
Exhibit B: the shameful, ongoing plight of American savers earning literally nothing — make that .01% — on their hard-earned savings (and presumably, their retirement nest eggs).
Instead, the Fed has encouraged (forced?) people to pile into stocks.
Result: near-daily record highs in virtually all U.S. stock indices the last few months.
I know some people are tempted to “party like it’s 1999” right now, but I would argue it’s more prudent to remember 2000 and 2008.
See also, “2011 Man of the Year: Teddy Roosevelt.”
