Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
THE STOCK MARKET BIG PICTURE - Video - 19th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
ILLEGITIMATE PRESIDENT - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20
Global "Debt Mountain": Beware of This "New Peak" - 13th Nov 20
Overclocking Zen 3 Ryzen 5600x, 5800x, 5900x and 5950x to 4.7ghz All Cores Cinebench R20 Scores - 13th Nov 20
Is Silver Leading Bitcoin or is Bitcoin Leading Silver? - 13th Nov 20
How Elliott Waves Simplify Your Technical Analysis - 13th Nov 20
How to buy Bitcoins using debit/credit card? - 13th Nov 20
Will COVID Vaccine Kill Gold and Silver? - 12th Nov 20
Access to Critical Market Reports - 12th Nov 20
Stock Market Dow Futures Reach 30,000 on News of COVID-19 Vaccine Trials Success - 12th Nov 20
8 Terms & Conditions You Must Know Before Asking For Life Insurance Policy Quotes - 12th Nov 20
Gold Stocks Post 2020 US Election Outlook - 11th Nov 20
Champions’ League Group Stage Draw: All You Need To Know - 11th Nov 20
Stock Market Secular Trend - 11th Nov 20
Stock Market Correction Curtailed by US Election - 11th Nov 20
What Causes a Financial Bubble? - 11th Nov 20
Ryzen 9 5900X RTX 3080 - Scan.co.uk vs Overclockers.co.uk UK Custom PC System Builder Review - 10th Nov 20
Killing Driveway Weeds FAST with a Pressure Washer - Saving Block Paving from LOTS of WEEDs - 10th Nov 20
Trump Fired, Biden Hired, What Next?  - 10th Nov 20
Looking for a Personal Loan? Here Is What You Have To Know  - 10th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Is Ben Bernanke Worth $250k Per Speech?

Politics / US Federal Reserve Bank Mar 25, 2014 - 05:34 PM GMT

By: Christopher_Westley

Politics

“Bernanke Enjoys the ‘Fruits of the Free Market,’” or so we’re told in a Reuters headline from March 4 about the former Fed chairman’s 40-minute speech in Abu Dhabi for which he received, ahem, $250,000. In the Reuters author’s defense, he was only quoting a DC lobbyist who was defending the amount, and added, Bernanke “will personally experience supply and demand.”


Well, yes, it’s just supply and demand and all that. No big deal and if you don’t like it, you must have something against markets. Still, it would be nice (and a bigger deal) if these reporters would quote someone outside of the accepted intellectual class of the Boswash corridor so compromised by being among the primary beneficiaries of all the new money Chairman Ben and his comrades created, ex nihilo, when he wasn’t shooting baskets in the Marriner Eccles building. If they did, they might hear some healthy skepticism about these events in which top officials cash in on their “public service” via contacts with the very industries they benefited while in office.

George Stigler explained such paybacks in his capture theory of regulation for which he received (rightly) the Nobel Prize in Economics, although I’d say they are better explained by the phrase, “quid pro and here-you-go!”

Figure 1: Speech honoraria immediately upon leaving term of office. From CNBC.

Less-beholden observers might pause during Bernanke’s victory lap and note that the dollar has lost almost 30 percent of its value since he joined the Fed in 2002, and that’s only if you accept the lowball metrics used in official CPI statistics. It is likely twice that amount if price inflation is measured in more traditional ways, including forgotten factors such as the full inflation for out-of-pocket expenses or the cost to maintain a constant cost of living. Americans of 1977 may have had to suffer through bad hair and disco music, but at least they didn’t suffer discrepancies between (a) what they experienced the value of the dollars in their pockets to be and (b) what the government said it was. We do.

Yet, today, the Establishment celebrates Bernanke for keeping the funds flowing to those parties it needs to remain in power. But while Paul Krugman wonders where the inflation is, I did some back-of-the-envelope calculations of Bernanke’s speech honorarium. Again using the CPI’s numbers, $250,000 today buys roughly what $193,000 bought in 2002, which would have purchased 603 ounces of gold at the time. Today, those 603 ounces of gold would be worth over $805,000.

The point isn’t that all Fed chairs should contract their post-retirement speeches in gold at the beginning of their term of service, although maybe they should. It’s that payoffs such as this reflect about what you’d expect when a currency receives monopoly protection and legal tender status, neither of which has anything to do with the free market. And notwithstanding the opinions of DC lobbyists, neither does Bernanke’s speech.

It followed the most reckless term of service of any central banker in U.S. history. He printed trillions of dollars to rescue a portion of Wall Street that could have internalized its post-crash losses and financed budget deficits that served to transfer capital to the fringes of military empire and out of reach of domestic workers. He “depression-mongered” the U.S. economy in September 2008 even though that market meltdown paled in comparison to those of 1987 and 2000-2001, thus setting the stage for Depression 2.0, and many billions in stimulus spending, bailouts, and other malinvestments.

Was all this simply an effort to test his faulty academic research of the 1930s? Perhaps partly. But remember that cartelizing factions on Wall Street created the Federal Reserve itself in 1913 for the cartelizing factions on Wall Street. Since those who receive the new money first benefit the most, it stands to reason that those interested parties would shower accolades and a share of the loot on Bernanke in the form of $6,250 per speech minute — and assume Mrs. Yellen is paying attention.

An amusing backdrop to the speech news is the continuing crises affecting Bitcoin and Mt. Gox, the fraudulent and now bankrupt Bitcoin exchange that appears to have lost deposits while itself engaged in fractional reserve banking, something only the protected class of modern banks are allowed to do. Understanding the uncertain future of both the dollar and the country’s power elite in the post 9/11 United States is key to understanding the rise of competing digital currencies (of which Bitcoin is just one). Their demand would never have been as strong had the dollar been inflated relatively less, and had market corrections been allowed relatively more, during the years of the so-called Great Moderation. It is safe to assume that establishment bankers are trying hard to use the Mt.Gox fiasco to demonize any movement toward peer-to-peer banking, which could easily have the effect of making banking as we know it go the way of the buggy whip industry in the nineteenth century.

If it does, one casualty just might be Bernanke’s future honoraria.

In a rational world, being paid $250,000 for this speech would cause many to wonder what is really going on. But such a world has not existed in banking since, perhaps, the 1830s. Until another one comes about, appreciate the irony that Bernanke is being paid in a fiat currency he himself helped devalue, and since his own successor at the Fed promises to continue operating in a Bernankean tradition, he will pay someone to diversify it, quickly, into real assets to protect its purchasing power.

Bernanke’s speech has little to do with supply and demand. It has more to do with being rewarded for extending the road down which we have been kicking the economy can. It’s a road that will eventually dead end.

Christopher Westley is an adjunct scholar at the Ludwig von Mises Institute. He teaches in the College of Commerce and Business Administration at Jacksonville State University. Send him mail. See Christopher Westley's article archives. Comment on the blog.

© 2013 Copyright Ludwig von Mises - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules