Bernanke is in for a second term. Thoughts?

I think it’s a good thing, and not just in the way that Paul Krugman says. Bernanke may be better than the hassle and uncertainty of nominating and bringing someone else into the process, true, but I think his performance needs to be acknowledged and looked at again in light of Obama’s state of the union perspective.

The financial meltdown was not Bernanke’s fault. Now, how he dealt with it is, of course- that’s his job. And he was part of some bold moves- printing lots of money to help people deal with the credit crisis. It worked, for the most part. Unemployment may be over 10% but the financial system is largely healthy again. Big banks and Wall Street are back in business. That is his job. He’s chairman of the Federal Reserve. His job is not to get people jobs. His job is to regulate the money flow and keep the economy churning. He did that. Now he’ll have to cut back on the money-printing to keep things in balance, and that will be painful. He’ll also have to raise the interest rate, which will be painful as well- double since it will be at the same time as he is reducing liquidity from the Fed.

But just because his main moves so far have been to lower interest rates and print a lot of money doesn’t mean that that is his financial policy. He was busy turning a possible depression into a deep recession. And not smiling at all while he did it, if you look at all the news photos.

Did he make some mistakes and let some things fail? Yes. But that is retrospect. The big whine right now is that he is printing money and holding steady at the zero-interest rate, that we should be letting the market right itself. Well, that’s why Lehman Brothers went under- we were trying to let the market right itself. Wasn’t happening.

So he printed all the money people had invented through credit. You know, we invented the money first, then he printed it. It’s supposed to work the other way but, well, this is America. We make our own rules.

Right. Right?

"As the nation continues to face the consequences of the worst recession in a generation, Ben Bernanke has provided wisdom and steady leadership in the midst of the financial and economic crisis," said President Obama.

Whether the backing of Obama is a positive or negative is in question, but it is significant that Obama decided to stick with his man after such a hard year. It shows me that Obama is about sticking with his decisions, similar to the health care reform bill, now the health insurance bill, and I like that. That makes sense, especially when money is involved.

Now Bernanke needs to do two other things that make sense when money is involved- stop inventing it out of thin air and start charging people to borrow it. I’m sure he will, and it’ll be a good thing when he does.

Photo Credit: Paul RA (via Flickr under CCL)