Federal Reserve Chairman Ben Bernanke should resign at the end of this year, which would be the perfect Christmas gift for the U.S. economy, said publisher Steve Forbes, a long-time critic of Bernanke’s loose monetary policies.
Under Bernanke, the Fed has slashed interest rates to near zero and has rolled out three stimulus programs under which the U.S. central bank buys assets such as Treasury holdings or mortgage debt from banks, a monetary policy tool known as quantitative easing that floods the economy with liquidity to push down borrowing costs and spur recovery.
Side effects include a weaker dollar, rising stock and commodity prices and an increased threat of inflation down the road.
Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did
“I think in the nation’s service, he ought to resign year-end, a Christmas present for the nation,” Forbes told CNBC.
“This trashing of the U.S. dollar never works. Weak money always means a weak recovery. This idea the Fed can guide the economy, stimulate the economy is absolutely false. There’s never a time in history where you get a sustained recovery when you have a weak currency. History’s against him,” Forbes said.
Such policies, Forbes pointed out, punish savers, who cannot live on their investments due to Fed policies that push interest rates down across the economy.
Meanwhile, a stronger dollar would encourage investing to pick up and get the economy moving again by providing proving more certainty as to how much investors can expect in returns.
“You’d get real capital creation again,” Forbes said.
“If you don’t know what they’re going to be valued in, you get less future investment, investment for the future.”
Meanwhile the Federal Reserve announced earlier that it decided at its October meeting to leave interest rates and policy stances unchanged, arguing that it will keep its foot on the gas pedal by stimulating the economy until the labor market shows noted improvement.
The U.S. unemployment rate fell to 7.8 percent in September from 8.1 percent in August, as employers added a net 114,000 new jobs to their payrolls.
Households reported that total employment rose by 873,000 in September, largely due to gains in part-time work, the Bureau of Labor Statistics reported recently.
“The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions,” the Federal Open Market Committee, the Fed’s rate-setting body, said in a statement.
“If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability.”
Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did