Guest Post: Does Bernanke Look Like a Man Who is Confident About the State of the Economy and the Prospects for Recovery?

Washington’s Blog

There is a lot to say about Bernanke’s comments on 60 Minutes today.

Bernanke’s statement that unemployment is the biggest impediment to economic recovery is ironic, given that Bernanke’s policies have increased unemployment. See this and this.

Harry Blodget notes that Bernanke implied that inequality is destroying America. Tyler Durden hones in on Bernanke’s statements that the economic recovery may not be self-sustaining, and that the Fed may buy even more bonds. Daily Bail picks on Bernanke’s claim that the Fed is not printing money.

There are certainly a lot of interesting things to say about Bernanke’s words.

But I think the real story is how nervous Bernanke appears.

Listen to his voice, and watch his lips quaver.

Ignore his words … does this look like a man who is confident about the state of the economy and the prospects for recovery?

Does this sound like a man who is sure that history will judge his actions kindly?

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About George Washington

George Washington is the head writer at Washington’s Blog. A busy professional and former adjunct professor, George’s insatiable curiousity causes him to write on a wide variety of topics, including economics, finance, the environment and politics. For further details, ask Keith Alexander…


    1. Tao Jonesing

      Inflation, according to Milton Friedman, “is always and everywhere a monetary phenomenon.” The Austrian school agrees that inflation is a monetary phenomenon, i.e. that price levels are increased in response to an increase in the money supply.

      So, you can’t spot inflation by simply looking for increased prices. You must tie those increased prices back to an increase in the supply of money. Correlation does not equal causation.

      This is where your theory fails. Base money has DECREASED by 5% since the begninning of the year. M1 has increased by just about the same amount, implying that people are saving their money instead of spending it. And, oh yeah, the velocity of money in M1 has slowed, as well, by about 2%.

      So, the major increase in commodity prices you’ve correctly identified is not being caused by inflation, i.e. by an increase in the money supply. What, then, is the cause? The fact that commodity prices have increased by a multiple of the dollar’s decrease in value demonstrates that financial speculators are the primary driver of increased commodity prices (and the loss of value in the dollar, too).

      So, as a banker I know says, what we have is “screwflation,” not inflation. The financial speculators view staple commodities as a sure bet (people have to eat and drive to work, right?), so they’re piling into staple commodities and driving the prices higher. What this does is redstribute aggregate demand, which portends a decrease in demand for consumer discretionary goods, which means more layoffs are coming.

      My working theory is that this is precisely what happened in the 1970s, that “stagflation” was not caused by wage inflation but by financial speculators artificially inflating the prices of staple commodities in order to achieve a political goal. Volker rewarded their efforts by breaking the back of American manufacturing and labor.

      And Bennie is 100% sure that he’s going to finish the hit job on the middle class that Volker started. Bernanke has never cared about unemployment, and the sooner we start realizing that the man is a scoundrel and not a fool, the better. Yes, he is a liar. But what we see unfolding is entirely what he intended, and it will result in significant deflation (i.e., an increase in the value of the dollar).

        1. Rick Halsen

          Screwflation. Hmmmmmmm. I thought we already coined this as Benflation. Well ok, it’s a synonym rated a little more for mature audiences. I get it.


      1. Doug Terpstra

        Thanks, Tao, enlightening as always:

        “And Bennie is 100% sure that he’s going to finish the hit job on the middle class that Volker started. Bernanke has never cared about unemployment…the man is a scoundrel and not a fool… Yes, he is a liar. But what we see unfolding is entirely what he intended, and it will result in significant deflation (i.e., an increase in the value of the dollar).”

        That is really what the elite intend, isn’t it, for a massive asset and power grab when everything deflates. How wicked and perverse.

        “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” —Mark Twain

      2. psychohistorian

        Nice new term, thanks – Screwflation.

        I would add to it the effect that being the Reserve Currency and running the printing presses in relation to all the currencies that have to keep at par. The rest of the world has known it was being screwed by America long before the reality coming to its citizens.

        Screwflation is a global term as well, IMO.

      3. Rick Halsen

        We are experiencing dollar debasement through Benflation or aka Screwflation. IOW, those that sell us oil for instance are charging us more because the dollar is being diluted, debased and yes, devalued. The only things deflating are for the most part things that are luxuries or non-essentials. This includes McMansions.

        There can be no long enough term deflation for any of TPTB to steal assets en masse on the dirt cheap IOW because ultimately there is debt attached to those once richly valuated assets. Your premise is delusional.

        Hyperinflation due to a currency collapse destroys all in its path. Except for gold and silver.


    2. ScottS

      Hahaha, thanks Jim!

      “February 29th, 2008 – Bernanke: “I expect there will be some failures. I don’t anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system.””

      Well, he was right. Everyone but Lehman Bros is still around. Mission accomplished!

  1. AlephNull

    I listened to your interview with Harry Shearer. I think it is wonderful! You write like a man better than Benjamin Franklin writes like woman (Mrs. Dogwood)! I laughed but I know that this is certainly NOT FUNNY?!

    tanks, alpeh

  2. Tor

    … not only did his lips quaver but also his left eve showed an interesting pattern during key questions.

  3. F. Beard

    There once was a banker Bernanke,
    well versed in all Fed hanky-panky.
    He tried many things rotten
    with linen and cotton
    but ended with nary a “Thank ye!”

    Harry Blodget notes that Bernanke implied that inequality is destroying America. George Washington

    Good for Ben then, in that case. He is correct. Either we shall adopt principled means of reducing that inequality (abolishing the counterfeiting cartel, for instance) or we risk cruder and wealth destroying redistribution by other means.

    Our choice is simple: Adopt genuine capitalism or risk losing the progress made toward it so far.

    1. Greg

      Ah yes but by inequality Ben means govt workers getting an unequal share of the wages or public budgets getting too high a share. He cares not about the upper 1% owning over 50% of the assets in this country, thats how its supposed to be!!

      1. F. Beard

        He cares not about the upper 1% owning over 50% of the assets in this country, thats how its supposed to be!! Greg

        I would not object to wealth inequality if I knew it had occurred by just means. But that is not the case; instead we have a government backed banking cartel which engages in competitive counterfeiting.

  4. Doug Terpstra

    Thanks, GW. And to your questions…no, no, an no.

    Yes, the quavering voice, quivering upper lip, and eye-twitches were unmistakably saying, in unison, “Don’t believe a word I’m saying; I’m lying through my teeth. My only concern, 100%, about unemployment is how far the herd-thinning slaughter will affect the members of my cartel. Period.”

    No wonder Congress has not allowed C-Span to use HDTV in chambers and hearing. It is not kind to politicians, most of whom develop tics and crooked mouths from the physiological effect of practiced deception.

  5. Ben

    I noticed that and tried to understand why. Maybe he has a medical condition. Although in some clips, his nervous tic doesn’t surface. I think it’s simply that he doesn’t like public speaking – a lot of people don’t – even those who are in the public eye, which explains why so many actors at the Academy Awards act like they’re on serious pharmaceuticals – they ARE – to deal with their stage fright.

    If you think that Bernanke is somehow nervous about the economy, then you just don’t understand. This is Bernanke’s DREAM. He spent many years studying this very scenario and dreamed of one day being able to apply his academic theories and save the world. Much like Greenspan and his de-regulatory ideology, we get to experience another ideologue’s pet project.

  6. Conor

    RE:Bernanke – Panic is never pretty.

    Panic/denial/panic/denial/panic/denial: The new American alarm warning system.

    America’s strobin’ on some real “good” sh**… And it does not bode well.

  7. profoundlogic

    I couldn’t help but notice the same nervous appearance and quivering lips. I would love to hear what a professional psychologist would determine after watching the speech. I interpreted it as his own comprehension that the words he was speaking were blatant, outright lies.

    His excuse about unemployment being related to education was particularly laughable. At a time when public educational institutions across the country are being forced to chop their budgets to stay afloat, we’re going to keep printing money to keep bailing out Wall Street.

    Utterly Fascinating!

    1. DownSouth

      I too found “His excuse about unemployment being related to education was particularly laughable.” Even recent engineering graduates, who in the past have had superb job prospects, have had difficulties finding employment, often settling for jobs in an area outside what they prepared for.

      When I was graduated with an engineering degree I had numerous job offers. I also had no debt. These young people these days have just the opposite—-no job offers and plenty of debt.

      This cartoon does a good job of capturing the current situation.

  8. Sufferin' Succotash

    When it came to a “tell”, you couldn’t beat the sweat on Dick Nixon’s upper lip.

  9. Alex

    …I think the real story is how nervous Bernanke appears.

    Listen to his voice, and watch his lips quaver.

    My initial reaction to this claim was that you really need some other video of him to calibrate his reaction to this situation, so I looked up his 60 Minutes interview last year. He was definitely a lot calmer back then.

  10. Cedric Regula

    I wasted a little time watching it, and found it very underwhelming.

    It was certainly dumbed down for the casual TV folk whom are vaguely aware that we have a Federal Reserve, the wrinkly old guy isn’t the CEO anymore, and the new chrome dome guy with the beard wants to tell us how loose our money supply is.

    Other than that, the only thing of note was Ben’s inability to credibly lie anymore.

  11. Tertium Squid

    I find such examinations of nonverbal minutae mostly serve to confirm what people wanted to believe in the first place.

    Normally I would point out – What if Bernanke was sick? What if he’s being blackmailed? What if any number of things?

    I would point that out, but these are exceptional times. Confidence game is all that the Fed has left. To me it is a sign of our sick economy and sicker society that the nervousness of powerful people is so important.

  12. emca

    Of course Bernanke is worried.

    Remember back to 2008 when our bail-out recovery was predicated on return of good times via increased consumer spending and the wealth of home ownership. The return to normality. Obama and Ben said as much.

    No increase in spending if you don’t have work. No borrowing to a better lifestyle if you have access to only expensive, limited credit, if your major source of wealth continues its decline.

    Can’t fuel consumption based economy on turnips…or hope.

  13. MyLessThanPrimeBeef

    The rich are getting rich and the poor are getting poorer.

    There more more people becoming poor than rich.

    So, you have more poor who are poorer.

    This means more cheap/cheaper imports as the poor substitute even further down the consumption ladder.

    That means more jobs outsourced, which means more poorer poor here.

    It’s a viscious cycle.

  14. Ed

    The inequality caused by disparities in education argument is a big odd. I would have thought giving hundreds of millions of government money to investment banks, which are then used to pay for incredibly large bonuses for their top officers, would have also had something to do with it.

    But beyond that, the percentage of Americans with a college degree has gone up steadily while inequality has increased. There is actually less disparity in educational attainment in this country than there was, say, forty years ago. I also suspect the employment figures for college graduates vs. non-college graduates are as cooked as all the other employment figures regularly cited in the media.

    1. Cedric Regula

      I think what Ben meant was you can’t get a high ranking job at a bank without either having a college degree, being a very good bridge player, or having served in a government position, preferably in the Treasury, Federal Reserve or other related regulatory agency.

      So having a college degree definitely improves your chances at getting one of these high paying jobs.

  15. Jackrabbit

    Bernanke _could_ be using 60-minutes as a forum to better explain Fed policies. But a) he knows that is unlikely to quell his critics and b) THAT mission is unlikely to make him so nervous.

    I think his nervousness likely stems from his politicizing the Fed by weighing in on the Bush tax cuts. He KNOWS he is crossing the line when he advocates not raising taxes/cutting taxes WHILE CONGRESS IS DEBATING THE VERY SAME ISSUE.

    It’s one thing to say Congress should tackle the deficit, its another to advocate cutting taxes as political leaders are choosing among alternatives.

    It seems clear that the interview was arranged last week – before rumors of a compromise on the Bush tax cuts and, I imagine, AFTER the House voted on the middle class tax cuts. Could this be good cop – bad cop Kabuki?

    Why did Bernanke take this ignominious stand? Was it a) a senior moment – he just couldn’t help expressing what he REALLY thinks; b) he wanted to please the Republicans who are ascendant (after all, he was originally nominated by Bush); or c) at the behest of the Obama Administration/Geithner?

    I might say (b) except for the recent example of another authority figure who provided a at an opportune time: Warren Buffet’s Op-ed lauding the Administration’s management of the economy soon after Geithner was roundly criticized for touting TARP as a success.

    It seems clear that Bernanke’s support for the Bush tax cuts makes it difficult for the Obama Administration NOT to agree to a compromise on the tax cuts. And the Obama administrations incessant caving to Republican straw men make this deeply disturbing scenario plausible. Confirmation: what has been the President’s reaction to such meddling? We have heard nothing that indicates that he is the least bit displeased.

    1. Jackrabbit

      Opps, part of the sentence didn’t make it. The next to last paragraph should read:

      “I might say (b) except for the recent example of another authority figure who provided a stamp-of-approval at an opportune time:”

  16. drunkagain

    IMO, BB has ALWAYS looked a bit nervous, and always had a slight quiver in his voice…I remember that going back to the confirmation hearings…

    He has good reason to be a bit shaky now!!!

    screwflation is a GREAT new term

  17. KnotRP

    Emily Latella, 60 minutes Interviewer:

    So….Ben, why do they call you The Bernank, and how could you increase the Fed Roll Reserves when there are so many hungry families on Food Stamps who could eat the Fed’s rolls, if only you’d let them? (Oh…nevermind)

    Meanwhile, I cannot believe he pulled the education will save us meme out for a trot — a sure sign he thinks we’re all idiots. Bankers bonuses would indicate that high education levels (doctors, lawyers, engineers, nurses, …) correlates very poorly with income, while sociopathic tendancies (fire economy money shuffling for skim) correlates very highly with income…and “ethics violations”….and “ripping off grandma’s face, for a house in the Hamptons”…

  18. KnotRP

    High Income directly correlates with being able to skim a small amount from a very large stream of money…

    Which college degrees prepare one for that opportunity
    to rip the face off thy fellow citizens?

  19. DH

    Bernanke always looks like that.

    Whenever I listen to him testify before Congress, I always think about his “quavering voice”, and I always think the same thing: he’s stressed, nervous, or something…

    1. Jackrabbit

      Yeah, he does get nervous sometimes. Like if the question/questioner is challenging. But this was different. These were generally softball questions and what appeared to be a comfortable setting. And it wasn’t any one question.

      As I describe above, the only reason I see for such discomfort is his weighing in on the Bush tax cut debate. Fed independence is such a central tenet that I doubt it was accidental. And it seems to be the only “newsworthy” thing he had to say.

  20. /L

    Bernanke is 100% sure, albeit he did regret not seeing the catastrophe coming but have of course no problems what so ever to predict about the calamity of Social Security coming in 15-20 years ahead. They have made carefully analysis.

    Why do anyone still take these fellows seriously? Why are they still in charge of things after screwing up the entire world and put millions and millions of innocent people in misery?

  21. Andrea

    Bernanke is speaking in a certain position. He is the head of a powerful institution. He is in the same spot as, for ex. a spokesman for the gvmt.; a functionary who is bound by his institution; a lawyer who argues a point on the law, but not from his heart; and underling who presents his superior’s views, etc. That is a particular role with many ramifications, and how one behaves depends for a large part on the position. The lawyer can credibly argue a position he himself does not believe in, his role is distinct from his individuality, and everyone perceives this, ergo the lawyer does not exhibit signs of deception, nerves, discomfort, and argues passionately – very like an actor. Compare to the underling who adopts his Capo’s pov – he must be sincere and smooth, convincing. So, a lot depends on the position itself and I for one am not quite clear on Bernanke’s, besides his official title / ostensive position.

    Secondly, different cultures handle these matters differently. In collectivist cultures, adopting and ‘selling’ content which is consensual is easier and more natural, because it is accepted that that is a role one plays, for the common good. (Like the lawyer. One’s personal beliefs, stances, etc. can be set aside without damage to anyone.) The US is of course highly individualistic, and individuals are supposed to believe what they say and do: they are supposed to be sincere, or come over as sincere, and are perceived as either sincere or false, with no shades in between. This black and white vision, built on the model of face-to-face interaction, leads to a somewhat paradoxical state of affairs: an emphasis on free speech (each individual has the right to express his beliefs) coupled with a high degree of tribalism, one believes what others like one believe, or what authority, superiors, one’s betters, dictate.

    So, it is hard to judge Bernanke’s commitment to his own words. Surely he knows that some of the boiler plate he serves up is just that, irrelevant or misleading. (Education and employment for ex.) He is also under the constraint of dealing simply, briefly, and comprehensibly with complex issues (note how the interviewer frames the discourse with his questions), or appearing to do so, to an audience that is not really capable of truly understanding what is said. So the whole pitch itself is off – or perhaps better is murky, opaque.

    Certainly he is very nervous, and his nervousness is tied directly to his position, and is, most likely not due to illness or stress from another cause (death in the family, etc.) His way of dealing with it is to rigorously control himself. While his legs are only briefly shown, one guesses he keeps them carefully immobile (tucked under and touching, that is the easiest.) His hand gestures are also controlled – note that he clasps them when not moving. That is so that they won’t move out of control. The clasp, as well, is supposed to look relaxed and casual. He tilts his head (a sign of sincerity: poor liars face rigidly forward and up a bit, in a defensive position, think of a teenager) but keeps it pretty immobile, doesn’t use that for emphasis or or any other kind of subtext or attitude. This is all pretty standard, in the dead-pan cover-up style.

    The nervousness leaks in the face, as pointed out. Ben is no actor. He can’t control it. He tries to keep his gaze and eye movements under control, again in the line of fixity (fixed gaze) so as not to appear ‘shifty’ but can’t manage it well, as it looks fake.

    The reasons for his nerves we can’t know. One way to better grasp an underlying tone is to watch without the sound (some controversial research has shown that deception is more easily detected this way.) Personally, I thought he looked more frightened than anything else: he seems too vulnerable, too insecure, for his position. His dead-pan style is an unsuccessful stab at the gravitas of authority. He has always been like this though, as said above.

    1. Siggy

      My perception was that he was lying and he knew he was lying. The reason that he’s lying is that he knows full well that the economy of the US, the globe is in a very precarious position.

      Mr. Bernanke is in a very conflicted position. The Federal Reserve has a mandate to preserve purchasing power whilst concurrently fostering full employment. Moreover, he was appointed by the President and his appoinment was confirmed upon the advice and consent of the Senate. Yet while he has an obligation to the President and the Senate he also has a direct obligation to the members of the Federal Reserve System. Whose interest should he serve?

      We will all be better served when we come to realize that the preservation of the currency’s purchasing power is the singular goal that the Fed can and should seek. Manipulating the rental rate of money has only succeeded in distorting the prices of production and consumption. In that process of manipulation, the allocating function of price has been destroyed and, voila we have inflation that is squeezing out of our fist like watered down bread dough.

      In a phrase, the Bernak is not the least bit comfortable in telling the big lie. And the reason he’s so uncomfortable is that he knows full well that he is telling a big lie. I have always felt that men who wear beards, especially the chin strap style are both shy and given to hiding. Just what is it that he’s hiding? The biggie, with all of the infusions to required reserves and the current edition of QE, he is making us all very much poorer.

      1. KnotRP

        If not for the beard, you’d see his lips quiver too…beards are a poker player’s indoor sunglasses.

  22. Grace Styles

    Some thoughts on US quantitative easing:
    1. How can you solve a debt crisis by creating more debt?
    2. Ok, so now they’ve got the extra cash. It seems like it’s not getting to the right places?
    3. Bernanke’s media performances seem to be undermining consumer confidence.

    And overall, nobody seems to think this QE is a good idea, more reasons why here:

  23. Groucho

    I watched the 60 min. Interview. Benny, for the most part acted normal (for him). The one topic where u could c his stress was Fed independence. He fears going down in history as the man who destroyed the Fed. He knows he’s on thin ice after all the bailouts and the coming congressional changes. The Fed wants to survive and expand it’s power. Can Bernanke buy out the movement to reign in the Fed’s power? If so, how will he do it? How much would it take to buy out Ron Paul?

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