Son of a Burns

Larry Kudlow all but calls today for Ben Bernanke to resign as Fed Chairman. He states that " ... Bernanke (as Fed chairman) has provided unbelievable, ultra-easy, free-money, zero interest rates for too long ... Bernanke knows how to ease but not how to tighten. The emergency is long past, but he is still operating an emergency policy of ultra-easy, excess-dollar creation."

These are good points. However, the real reason Bernanke should resign (or the Senate should refuse to re-confirm him) is that he is completely politicized. Ever since the near hyper-inflation of the 70's, begun by Richard Nixon's obsequious Fed Chairman, Arthur Burns, our heads of the Federal Reserve have studiously maintained the independence of Federal Reserve policy from political machinations of the White House. The result has been almost 20 some years of little to no inflation and unremitting economic expansion.

Bernanke has broken with that tradition, and as a result, our Republic is heading for economic disaster. And the truth is, he did it simply because he is not a strong man. Can anyone believe that Alan Greenspan in his prime would have rolled over to the demands of the doyens of the financial markets and the White House as Bernanke has done? The dollar collapses like a pair of cheap socks and yet Mr. Bernanke is cowering in his office, afraid of raising interest rates even a point above absolute zero.

What is he afraid of? A strong dollar, which is the only thing he really can control (as opposed to employment and macro-economic activity), would serve to stabilize the financial markets and reassure a world eager to buy into the safety of American assets. Shouldn't those achievements be enough for an unelected head of a quasi-government bureaucracy?

Apparently not. Instead, he channels the fears of the White House that this recession won't end before the 2010 elections, and vainly keeps pumping printing press money into the economy, hoping for an economic "bubble" that will protect the incumbents in Washington.

Well, bubbles burst, as they did in 2000 and 2006, and this one will, too, almost as soon as it appears. We need to be shut of this weak-sister of a Fed Chairman well before the bursting, so that the hard and necessary monetary policies can then be instituted.