Calling The Time “Person Of The Year”: Jackass

Calling The Time "Person Of The Year": Jackass

Courtesy of Karl Denninger at The Market Ticker

Why?  Because Bernanke’s actions have singularly done more damage to the American economy – and America – than anyone in the history of this nation.  He clearly eclipses Nixon in his dissembling, while making a mockery of the free market. 

Just like those other infamous persons pictured above he has acted in the belief that he can do so without consequence on the world stage. 

This notion is not easily disabused, but in the end it always proves false.

Today’s lesson in falsity is the announcement, long rumored, by the Gulf States that they will be forming a common currency, breaking the formal and informal dollar pegs that have controlled the price of oil and kept the petro-dollar recycling mill operating, allowing The United States to force our inflationary policies down the Arabs’ throats.

“The Gulf monetary union pact has come into effect,” said Kuwait’s finance minister, Mustafa al-Shamali, speaking at a Gulf Co-operation Council (GCC) summit in Kuwait.

The move will give the hyper-rich club of oil exporters a petro-currency of their own, greatly increasing their influence in the global exchange and capital markets and potentially displacing the US dollar as the pricing currency for oil contracts. Between them they amount to regional superpower with a GDP of $1.2 trillion (£739bn), some 40pc of the world’s proven oil reserves, and financial clout equal to that of China.

Potentially displacing my tailfeathers.  That displacement is now assured.

Oh, and it doesn’t stop with just money either:

The GCC also agreed to create a joint military strike force – akin to the EU’s rapid reaction force – to tackle threats such as the incursion of Yemeni Shiite rebels into Saudi territory earlier this year.

They nevertheless repeated on Tuesday that “any military action against Iran” by Western powers would be unacceptable.

Well there you have it.

China will be next with a Pan-Asian common currency and exchange system.  The rumblings have been coming from there too, and they’ll be followed by action – if for no other reason than that with the unpegging of oil from the dollar there is no longer any reason for China to continue to maintain a dollar hegemony of its own, and in fact doing so could be extremely damaging to China’s economy.

Bernanke is entirely responsible for this.  By encouraging the bubble economy during Greenspan’s time in The Fed (Bernanke was the chief agitator for 1% interest rates – and holding them too low during the early part of the 2000s) and trying to restart the bubble economy this time around through both ZIRP and intentional distortions through the credit markets, shielding those who made bad decisions while cramming the inflationary pressures down the throat of trading partners, Bernanke has guaranteed the loss of global reserve currency status for The Dollar.

Our Senate is too stupid to recognize this and stop his re-nomination. 

You can take that to the (insolvent) bank. 

Yet a failure to do so – a failure to reject Bernanke for a second term – will result in the acceleration of action by China and The Gulf States.  Before Bernanke’s next term expires you will see the dollar decoupled and left in the sand as the former anchor of global trade.  You will see import prices in dollar terms – especially oil and similar commodities – skyrocket.  You will see the destruction of America’s way of life.

None of this was unforeseeable.  Defending the currency isn’t just Treasury’s problem – it is yours as well when you act as Treasury’s handmaiden by giving them free license to issue Treasuries into a zero-interest-rate environment for deficit spending purposes.

Stand and take a bow Ben – your true legacy will be recognized in the fullness of time.

Mark my Ticker.