A letter I sent to the Denver Post:
The Denver Post on January 26, in “Fresh Term for Fed’s Bernanke”, endorsed Ben Bernanke for a second term as Chairman of the Federal Reserve Board. This recommendation was based on his “decisive leadership in preventing the collapse of credit markets … late 2008.” The FED according to the Post is an “institution that has served us well for decades … .” However, The FED is not an institution that has served us well. It was set up to protect the value of the dollar and to avoid boom and bust cycles. Since inception of the Fed, the dollar has, in real terms, declined over 87%, now having a purchasing power compared to a 1913 dollar of less than 13 cents. Just since the mid 1990s overly easy monetary policy has caused or enabled two significant boom-bust periods with accompanying bubbles in first dot.com stocks and then residential and commercial real estate. The Wall Street Journal in a January 25th editorial which argues against confirmation partially because of Bernanke’s and the FED’s complicity in the causing the most recent boom and resulting bust and financial crisis, unwittingly gives the one legitimate short run reason to retain Bernanke; other potential nominees would be even worse. In the long run, instead of celebrating the Fed and central banking, true financial reform would, following Nobel winner F. A. Hayek look seriously at proposals to “denationalization of money” including the recent suggestion by economist Richard Ebeling to end the Federal Reserve.
Dean School of Business
Professor of Economics
Metropolitan State College of Denver
Professor Cochran, with Fred R. Glahe, Professor Emeritus, University of Colorado Boulder is the author of The Hayek-Keynes DebateÂ¾Lessons for Current Business Cycle Research. 1999. Lewiston, New York: The Edwin Mellen Press. Paperback reprint 2009.