An open letter to Ben Bernanke
March 14th, 2008 | Living
Dear Ben,
How are you? I am fine. I was just writing to see how things are going, since you seem to be having a pretty stressful couple of months lately. I realize your buddies might be pressuring you to do some harmful things to the economy, but I know you’re better than that. After all, your mother didn’t raise a follower, did she?
There have been some rumors going around the schoolyard lately saying that you want to keep cutting interest rates. I know you have a big important meeting scheduled for March 18, and I was hoping we might be able to work some things out before your big day.
I thought I would ask you to stop cutting interest rates. Before you start crying about how your friends are going to yell at you, I have to tell you they’re not really your friends. They’re using you, Ben. If you keep cutting interest rates like your banking buddies are asking you, you are putting cheap money into the market that is only helping your banking “friends”. So why do you care what they think?
Ben, I know you might not have realized this, but you’ve cut interest rates so far that they’ve fallen below the rate of inflation. This is very, very bad for all the other little boys in girls in America that are trying to save money and keep their heads above water. I know your “friends” are telling you that lower interest rates mean that it is easier for their banker buddies to lend money to each other, but it’s not going to happen. Everyone is very scared for their money right now, Ben. Banks don’t want to lend any more money, because a lot of broke and dishonest people aren’t paying back their loans. You might have heard about this, since you and your buddy Al Greenspan helped create the situation. You could drop interest rates to 0%, and it won’t change a thing.
Ben, I realize you’re very busy, so I’m going to say this as simply as possible: You’ve broken the U.S. economy. I know you say that you have the American tax payer in your best interests, but I really have to wonder about that. Maybe if you had cut interest rates before the economy started to slow down, we might have been able to weather this storm. Surely, with all those cool calculators and gadgets you have in your playpen, you must have been able to see that the party wasn’t going to last forever. But Ben, I’m afraid you did too little, too late.
Because you’ve cut the interest rates so low, inflation is going crazy. Gas is over $110 dollars a barrel, which is the most expensive it has ever been. I paid over $4 for a gallon of milk the other day, Ben. Kellogg’s raised the price of Pop Tarts. I looked into gold prices, and they were over $1000 an ounce. Is that natural economic growth, or do you think the unchecked inflation you are responsible for might be a part of that?
My wife and I had to cancel a family trip to Europe this summer because the Euro is worth more than 1.5 U.S. dollars, and it’s getting worse. I’m sure you’ve heard that America relies on imported goods from foreign countries to survive. If the dollar is so weak, what do you think happens to the price of imported Nintendo games and knockoff Crocs? Ben, I thought your parents sent you to preschool to learn about these things.
So, Ben, I’m asking to please stop throwing a temper tantrum and to stop recklessly cutting interest rates. You’re hurting America.
Love,
Seb
P.S. Shave the beard.
Hah! I love it, and agree with your sentiments 100%.
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Very funny! Even though inflation is going to go through the roof, but Wall Street is begging for rate cuts. I think we all know what Ben is going to do.
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Great post - I eagerly wait for Mr. Bernanke’s reply
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lol - love it Seb! Its so frustrating, those of us who are financially responsible are being punished for the irresponsibility of others! I keep seeing my money go down the drain every time Ben lowers the rates.
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This was very amusing. Although I’m all for rate cuts right now because I’m looking into buying a house within the next year or so.
…and I like the beard!
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From a consumer’s perspective, I agree with you.
But, I just started my Econ class in my MBA program last night and we talked about this exact situation.
The way our current monetary system is setup, the Fed can inject money into the markets to bring rates down. The Fed doesn’t say “this is the rate”, that’s not how it works. They can say what they want the rate to be, and it usually works out like that. But really they are adjusting the money supply, which in turn changes rates. Lower rates are supposed to stimulate the economy — it discourages saving, encourages spending. It encourages capital investments, even through foreigners.
It’s supposed to have a trickle down effect where now there are more buildings, factories, and parking decks being built. That puts people to work, who earn money. They take that money and spend it.
The only problem is right now, people are planning on saving more money (at least that’s what you hear when you ask about the tax rebates coming later this summer). That will, in essence, do jack for the economy. If everyone saves the money and no one spends it, it will be a worthless effort.
Again, I just started this class so I’m not vouching to be an expert. But we talked about it last night so I felt it was worth sharing.
I’m also not taking up for the people who aren’t paying their mortgages or the banks that said “Eh, sure you make $30,000 per year, here’s a million dollar house!”
Also, recessions aren’t necessarily bad. We can’t grow forever. The economy has to correct itself. Hopefully with the dollar being so inexpensive, more people will come as tourist and investors to the US. Then later, it rebounds…
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[…] at Pinching Copper, Seb wrote A letter to Ben Bernankecomplaining how he keeps cutting interest rates and it’s not helping Seb while he’s […]
hahahaha, seriously made me laugh out loud, I love it.
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