Five Questions for Bernanke
The chairman of the Federal Reserve, Ben Bernanke, will on Wednesday at 2:15 p.m. hold what is being billed as his first-ever regular press briefing.
Here are some questions that might be worth asking.
1. When you took over as chairman of the Federal Reserve on February 1, 2006, a dollar was worth one five-hundred-sixty-seventh of an ounce of gold. This month, the dollar fell to one fifteen-hundredth of an ounce of gold. Why has the value of the dollar, as measured in gold, fallen by more than half since you have taken over as chairman? What information is being transmitted, in your understanding, by that change in the price of the dollar as measured in gold? Do you pay much attention that that price? Do you see the value of the dollar as primarily your responsibility or as primarily that of the Treasury Department?
2. When you took over as chairman of the Federal Reserve on February 1, 2006, the Fed's balance sheet was about $863 billion. Now it is about $2.7 trillion. Do you plan to hold on to that $2.7 trillion, or bring the amount of stuff the Fed owns back down to a level more like what it was when you started? If you plan to reduce the balance sheet, what effect on the economy will it have when you sell off $2 trillion worth of stuff? Isn't $2.7 trillion a lot of stuff for a bunch of unelected economists to have control over in a democracy?
3. Where in the Constitution do you get the power to do what you are doing?
4. The chairman of the board of the Federal Bank of New York is Lee Bollinger. Mr. Bollinger is the $1,753,984-a-year president of Columbia University, which has an endowment recently valued at about $6.5 billion and has about $1.3 billion in debt, mainly issued through the Dormitory Authority of the State of New York, but also through the New Jersey Economic Development Corporation, the U.S. Department of Education, and the Empire State Development Corporation. As a Class C director, Mr. Bollinger is prohibited from owning bank stock. If it'd be an unacceptable conflict of interest for Mr. Bollinger to own bank stock while chairing the New York Fed, is it also a conflict of interest for him to chair the New York Fed while running an institution that is this big a player in the financial markets? And as a follow up, according to Columbia's latest financial report, "On October 1, 2008, the University entered into a $200 million notional value forward starting, fixed payor swap agreement to protect against the risk of interest rate changes." If even the chairman of the New York Fed is willing to pay hundreds of millions of dollars to protect his institution against "the risk of interest rate changes," what can you say to reassure the rest of us about that risk?
5. The Federal Reserve System (including the regional banks) reportedly has 22,000 employees. I know that Congress mandated the Fed target full employment, but I think they meant for you to achieve that goal via monetary policy, not via direct hiring. Could you do your job with fewer employees?
Have your own question for Chairman Bernanke? Add it in the comments section below.
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