Ben Bernanke At Industrialization's End

Nobody wants to pull the emergency brake on a runaway train. If you try to make it stop, it may jump the tracks before it would have. At the least, you’ll have flattened the wheels. If you just let it go, it’s gonna crash, but they won’t point at you.

In the real world, we’re talking about the economy, and Hope Boy’s stop-lossing Ben Bernanke.

Bernanke is a Viet Nam-generation economist, who wields enormous intellectual firepower. Taught himself calculus in high school, Harvard summa cum laude, PhD from MIT, etc., etc. He taught at Stanford and NYU, then chaired Econ at Columbia. He’s been a Governor at the Fed since 2002, and Chair since 2006. Somewhere in there he chaired Commander AWOL’s Council of Economic Advisors.

Actually, I kind of like him. The Bernanke Doctrine (spoken in portentous basso profundo) is why. Bernanke is an expert on the causes of the Great Depression, believing that the Fed’s having reduced money supply, consequently reducing access to credit, caused the economy to tank in the early thirties. He’s a bear on deflation, and the Bernanke Doctrine would:

* Increase the money supply;

* Ensure liquidity;

* Lower interest rates, even to nothing;

* Control yield on corporate bonds;

* Depreciate the dollar;

* Buy lots of foreign currency;

* Buy industries with depreciated money.

Cowboy up, Ben! But two caveats from me. First economics has a moral dimension. Sorry, that's just the way it is. If the government is going into business, it should find opportunities beside hookers and blow. Or dissipation and pollution, which brings up the second warning. There are various economic cycles, the well known five-year boom and bust cycle of recession and recovery, based on consumer spending. Mainline academics are coming to recognize a fifty-year cycle based on capital spending, too. There are resource cycles, housing cycles, technology cycles, and so on. One cycle that hasn't crashed -- yet -- is what we call the Industrial Revolution.

In the first half of the eighteenth century, European deforestation forced conversion from charcoal to higher-quality fuel, coal. From this came steel production on a grand scale, steam power, and mass production. The second half of the nineteenth century gave birth to the petroleum industry. Oil, an even higher quality fuel than coal, accelerated technological and scientific innovation, giving us the weirdly comfortable life we know.

Resource depletion, and -- can you believe it -- saturating the planet’s capacity as a pollution sink have brought us to the point of changing our modus operandi again. This time in heroic ways that make the shift from charcoal to fossil fuel look like reaching for a book of matches. It’s pretty exciting, and I’m doing what I can, but somebody’s got to pull corporate capitalism's brake cord.

Pulling the cord would amount to recognizing the moment we have reached, and the necessity of choosing how we will live. Maybe whether we will live. Bernanke's willing to finance economic recovery by treating money as the abstraction it is. So far, so good. The problem is the moral dimension: Ben's going into the hole to do it. There's nothing you can do that can't be done, and so on, but somebody has to let you have the stuff to do it. They're going to want something later. Whatever we do with inflated cash has to pay, or we wind up with a lot of debt and no production. Cars and guns won't do it. Given our moment in history, making anything other than a world in which we and our heirs can sustain ourselves on solar gain puts us against the wall. And not everybody's green.

Good luck, Dr. Bernanke.