The job’s not done yet, Bernanke

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The job’s not done yet, Bernanke

Lately, high-rise construction is all over Manhattan. The sounds are ceaseless. The builders are most sensitive of the smell of money. Korean restaurants in New York and New Jersey are barometers of the economy. Since I became a New York correspondent in the summer of 2009, I’ve never seen the Korean restaurants as crowded as they are today. You don’t even need to refer to economic indicators like the unemployment rate or growth rate. You can feel the market rebound in the air. It was enough to make Federal Reserve Chairman Ben S. Bernanke stab Wall Street in the back.

Bernanke rewrote 100 years of history of the Federal Reserve. By nature, a central bank focuses more on price than growth because of the doctrine that money is the veil of commodities. It was generally believed that playing with money would only stir up the price.

However, Bernanke had a different idea. The Federal Reserve is the only entity that can print dollars for free. And he thought that that power could drive deflation away. It is the so-called Bernanke doctrine.

Bernanke was the relief pitcher prepared to tackle the 2008 financial crisis. Former President George W. Bush appointed him in 2006. As a professor at Princeton University, he researched the Great Depression of the 1930s. And he was reckless, releasing $2.35 trillion in two rounds of quantitative easing - QE1 in 2009 and QE2 in 2010. When they were not fully effective, he announced QE3 would take effect in September 2013, despite opposition.

His critics called him “Helicopter Ben” for dropping money from the sky. When the market did not react promptly, he held a press conference. It was a rare move - even eccentric - for the chairman of the Federal Reserve, a position generally perceived as a symbol of a hermit. On June 19, he proposed the timeline of his “exit strategy.” He declared victory of the six-year-long war against deflation too early.

He may have felt nervous as his tenure is set to end in January 2014. He may have wanted to make it clear so that his successor would not ruin his prescription. If all things work out as he planned, Bernanke will be remembered as a hero in the history of central banks.

However, something doesn’t feel right. Has the American economy really changed its nature and escaped from the tunnel of crisis? If there is a competition for unfriendly and incompetent civil servants, American public workers have a very good chance of winning a gold medal.

It is a great mystery how the employees at American companies manage to keep such unpleasant attitudes when the unemployment rate is so high. Apple, the pride of America, is struggling in a showdown against Samsung. Wall Street’s aggressive and successful money-making is history. Shale gas drilled from the ground and money dropped from the helicopter have created illusions. If the reviving real estate boom leads to bubbles, the consequence is very obvious.

*The author is a New York correspondent of the JoongAng Ilbo.


by JUNG KYUNG-MIN

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