The Boy Who Cried 'Exit Strategy'

VANCOUVER, Canada (Bullions Bull Canada) -- Bloomberg News and Federal Reserve Chairman Ben Bernanke have been at it again, performing their own little version of the legendary Abbott & Costello "Who's on First?" skit. They call theirs "exit strategy."

In the latest installment, from March 11, we have Bloomberg in its role of straight man Abbott trying to make four years of empty promises of a monetary "exit strategy" by Costello (played by Bernanke) sound admirable.

The best Bloomberg could do is to proclaim Bernanke is "provoking mystery" with year after year of his doubletalk. This is followed by paragraph after paragraph of the same (mandatory) "maybe he should/maybe he shouldn't" drivel we have been subjected to since 2009. Time to update your script!

Most readers are familiar with the fable "The Boy Who Cried Wolf." For amusement, a shepherd boy began periodically shouting out "wolf," in order to rouse all the other villagers and force them to run all the way out to the sheep's pasture before determining for themselves that there was no wolf.

However, the villagers soon caught onto this game so fewer of them began heeding the false alarms. Finally, and ironically, on the day a wolf actually appears in the pasture no one at all responds to the boy's real alarm.

While the boy of the fable engaged in his serial lying purely for the purposes of amusement, it's certainly easy to ascribe other, probable motives for such lying on the federal level.

Our economies have what is known as a "business cycle." While "full business cycles" are generally deemed to stretch out over roughly a decade, there are clear and obvious sub-cycles within these longer intervals. Specifically, throughout our modern economic history the average length of any particular growth cycle is a little more than three years, with 40 months being the number most typically quoted.

Yet, with the supposed U.S. "recovery" now four years in length, we still see Bernanke engaging in the same absurd song and dance. Going all the way back to the early months of this mythical recovery Bernanke has been promising an "exit strategy" every few months -- like a lethargic cuckoo clock.

However, Bernanke's game is actually a two-step. First he teases the slack-jawed yokels with another promise of an "exit strategy" (from the most extreme/insane monetary stimulus ever attempted by any government). Then, in the proud tradition of P.T. Barnum he "provokes mystery" by telling the yokels he won't actually deliver on this mythical exit strategy...yet.

Why not?

Because it's "too soon." The recovery "needs more time" to "gather strength" and/or "build momentum." Is this plausible? What would we think if we saw a boy with a new bicycle but four years later the boy is still riding around with the training wheels on his bike? A reasonable person would assume the boy will never be able to ride the bike without training wheels, and should he remove them, he would instantly fall flat on his face.

What should a reasonable person infer when Bernanke's incessantly hyped recovery cannot withstand having its own "training wheels" removed after four years? Indeed, Bernanke has already promised to keep the training wheels on the U.S. economy until ( at least) 2015. Can Bernanke's fear/intransigence (or stalling) be explained in any other way? Perhaps.

One could argue this sounds remarkably like the Bernanke of 2005, writing about the U.S.'s "Goldilocks economy" where markets and house prices could/should/would just keep going up and up and up forever. Of course that was right before Bernanke took over the Fed, and things didn't work out quite as he predicted.

In fact, a little over a year later Bernanke was warning Americans about a "soft landing" in the U.S. housing market. But that wasn't quite how things turned out either. D'oh!

This brings us to the last four years of Bernanke promising the world his "exit strategy." He's never quite been able to deliver on that promise -- because he didn't want to ruin the U.S.'s "Goldilocks economy."

Which brings us back to the beginning of this circle of lies.

Let me summarize this previous account of Bernanke's career as Federal Reserve chairman since any/all mainstream accounts of Bernanke's work suffer somewhat from the defect of not having the slightest connection to reality.


2005: Bernanke writes about the U.S.'s "Goldilocks economy."

2007: Bernanke promises a "soft landing" after his Goldilocks economy ran out of steam.

2008: Bernanke engages in the largest/most radical money printing in history (along with permanent 0% interest rates) after his "soft landing" turned into "the worst crash since the Great Depression."

2009: Bernanke begins promising his "exit strategy."

2009-13: Bernanke tells us he can't deliver on his "exit strategy" yet. (Because he doesn't want to mess up the U.S.'s new Goldilocks economy?)

Of course, even this account of Bernanke's less-than-illustrious career suffers from being framed in the economic mythology fed to us by the corporate media.

What Bernanke called a "Goldilocks economy" was in fact nothing but the fraud-saturated, U.S. housing bubble, and the $trillions in excessive spending and suicidal borrowing that accompanied it.

The resulting "crash" in 2008, which was deliberately triggered and amplified with the assassination of Lehman Brothers, has led to the U.S. Greater Depression. The entirely mythical recovery that has supposedly followed has been nothing more than the continuation of this horrific economic trough.

Proof of this reality comes in many forms. In previous commentaries readers have seen charts conclusively showing: no "new jobs," no "recovery" in the housing market and how energy consumption has collapsed in the economy of the world's great Energy Glutton. How do you "grow" an economy with less-than-zero energy?

However, the most powerful/obvious proof comes from the lack of reaction to this extreme/insane stimulus from the U.S. economy. Why has no government --even Japan -- ever engaged in a collection of monetary policies this wildly "stimulative?" Because in any remotely healthy economy it would cause such an economy to immediately overheat and then quickly explode into sector after sector of asset bubbles.

Yet, after four years of this pseudo-growth, we see Bernanke just as terrified at the thought of removing the training wheels from the U.S. economy today as he was in the early months of 2009. In fact, Bernanke's massive, monetary prop for the U.S. economy is more than mere "training wheels." It has been shown to be nothing less than life support.

Bloomberg was actually correct about one thing in its latest Bernanke-babble. He is "provoking mystery." But the mystery is why do any of the yokels still listen to anything that comes out of the mouth of the boy from the Federal Reserve?

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

More from Opinion

7 Takeaways From Google's $550-Million Investment in Alibaba Rival

7 Takeaways From Google's $550-Million Investment in Alibaba Rival

It's Just Not Smart For Investors to Ignore the Threat of a Trade War

It's Just Not Smart For Investors to Ignore the Threat of a Trade War

To Think a Trade War's Still Just a Threat Is the Dumbest Thing on Wall Street

To Think a Trade War's Still Just a Threat Is the Dumbest Thing on Wall Street

Flashback Friday in Politics: Trade Wars, Manafort, Immigration Dominate Minds

Flashback Friday in Politics: Trade Wars, Manafort, Immigration Dominate Minds

Microsoft and Sony's Rumored Game Console Plans Bode Well for AMD

Microsoft and Sony's Rumored Game Console Plans Bode Well for AMD