"As the Fed's open-market committee meets this week, what the world wants is a revival of American monetary leadership. It wants the Bernanke Fed to stop the global run on the dollar, and that means declaring an end to its rate-cutting mistake."
"The Fed's dollar indifference has sent an inflation shock through those dollar-linked economies...The result has been the largest decline in America's global economic influence since the 1970s."
"...its rate-cutting binge may finally be over, and we can be grateful for that small favor. The consequences of its easy-money bender will roll through the economy for years to come, however, so it's important to draw the right lessons."
"What we can't figure out is what in the world Fed officials are thinking, assuming that's even the right word...Central banking isn't an academic seminar where ideas don't have consequences."
"All of this is evidence that the Bernanke Fed has failed in its main responsibility of maintaining price stability and a stable dollar...It has been an historic blunder, and the damage will only increase the longer the Fed takes to correct it."
"But unlike the Fed and other central banks, the ECB seems determined to avoid the stagflation mistakes of the 1970s."
"...a glimmer of good news this week: The European Central Bank raised its key interest rate a quarter point... On Thursday, oil hit $146 a barrel, leading us to wonder how high it has to go before Mr. Bernanke admits he has a problem. $200?"
"[Bernanke, Kohn, and Mishkin], the Fed's three intellectual amigos, continue to pursue a reckless policy of negative real interest rates...they have overestimated the risks of recession while underestimating the dangers of inflation."
"We now know the economy's weakest point was the fourth quarter of 2007 into early 2008...By tanking the dollar and igniting a commodity spike, however, the Fed has made the recovery more difficult and lengthened the period of malaise ahead."
"Bernanke insists the Fed has had no other choice to stave off recession, and that in any case "core inflation" (which excludes food and energy) is contained....American consumers... don't buy Cheerios and gasoline with "core" dollars."
"Mr. Bernanke should add that America's central bank will do whatever it takes to support the dollar. Especially amid current financial strains, we need investors to favor U.S. assets."
"libertarian blogs are full of tut-tutting that the economy has held up surprisingly well, and for a year we've been arguing the same thing. But there's no guarantee this will continue..."
"Fed's rate cutting led to dollar flight that produced a commodity spike and oil as high as $147 a barrel. That only made a recession more likely as it sapped consumer discretionary income around the U.S. and worried families and business"
"We can remember when tougher Fed chairmen used to refrain from adjusting interest rates close to an election for fear of seeming to be political; they would never have dreamed of meddling in campaign tax and spending debates."
"Reckless monetary policy that did so much to create the credit mania and then compounded the felony with a commodity bubble and run on the dollar whose damage is now becoming apparent."
"As frequent critics of the Fed in recent years, we don't think Chairman Ben Bernanke has much choice at the moment."
"Better choices [for New York Fed President vacancy] would include current Fed Governor Kevin Warsh...or Dallas's Richard Fisher, who ... dissented from the policy that created the 2007-2008 Bernanke oil and commodity spike."
"If Ben Bernanke weren't an economist and central banker, we'd guess he'd be a poker player on one of those cable channels, with dark shades and a penchant for betting all his chips in Texas Hold 'Em."
"Bernanke's decision to flood the world with dollars will no doubt succeed in preventing a deflation. What everyone wants to know is whether he also has the fortitude -- or even the desire -- to prevent a run on the world's reserve currency"
"The current financial storm has also shown the benefits of a common currency."
"The Bernanke Fed has now dropped even the pretense of independence and has made itself an agent of the Treasury, which means of politicians."
"With trillions of dollars in budget deficits still in the pipeline -- even before health care -- Treasury may find the world keeps demanding higher yields to offset the fear of potential inflation."
"Mr. Kohn and Chairman Ben Bernanke have made the Fed an arm of the Treasury over the last 18 months...for all the harm he has done to the Fed's political independence, Mr. Kohn should resign too."
"The Fed's loose policy from 2003 to 2005 created the commodity and credit bubbles that made these countries flush with dollars...these countries then recycled those dollars back into dollar-denominated assets, such as Treasurys and [GSE debt]"
"It's not going too far to say we are watching a showdown between Fed Chairman Ben Bernanke and bond investors, otherwise known as the financial markets. When in doubt, bet on the markets."
"The warning that Mrs. Merkel -- and China and the financial markets -- is sounding is whether the Fed will have the political courage to start removing that liquidity even if the unemployment rate is high, and before it creates another mess."
"Usually when a politician lobbies a central bank, it's to demand easier money. We can't recall a similar tight-money intervention from a national leader, save perhaps Ronald Reagan's quiet support for Paul Volcker in the 1980s."
"Mr. Bernanke will need political courage that we haven't seen since Paul Volcker was Chairman in order to exit from all of these efforts in time to prevent another bubble or broader inflation."
"Congress and the White House want the Fed to stay easy as long as unemployment stays high. But if the Fed does so, it will run the risk of acting too late, well after inflation expectations have begun to build."
"The Customer Is Right: Mr. Obama should listen to Chinese warnings on the dollar."
"We're beginning to wonder if the Ben Bernanke Federal Reserve isn't populated with French existentialists. A la Jean-Paul Sartre, they have a 'no exit strategy when it comes to unwinding their extraordinarily easy monetary policy."
"It's notable that both Mr. Obama and Mr. Bernanke used the very same language yesterday in pledging a 'strong and independent Federal Reserve.' They both protest too much."
(a strange one to quote because it is written in the voice of the Chinese Ministry of Finance mocking Bernanke: "We will only be too happy to cease this flight from dollar assets when we observe your determination to tighten money")
"President Obama reinforced that message in Tokyo Saturday when he called for "balanced trade," which suggests a weaker greenback to spur U.S. exports...This is a dangerous game that could lead to some serious economic policy mistakes"
"At this monetary moment more than any since the late 1970s, the Fed needs a hard-money chairman with the courage and credibility to resist the temptation to escape from the consequences of the last bubble by floating another one."
"someone at the Fed will point out that if you remove food and energy...then producer prices rose by only 0.5%... this is the same "core" price rationalization the Fed used earlier this decade to keep monetary policy too easy for too long."
"The Democrats' loudest complaint, moreover, is that Mr. Bernanke and the Fed haven't been easy enough in printing money...Is the Fed going to buy another $1.25 trillion, or promise to keep rates at zero for another 14 months?"
"Ms. Yellen's default policy has always been to keep money as easy as possible for as long as possible to reduce unemployment... If that means taking some risks of price spikes in oil or other assets, or of future inflation, so be it."
"Ben Bernanke might want to ask the Japanese how their efforts to fight deflation worked out."
"Asian policy makers are right to blame Fed Chairman Ben Bernanke, President Obama and the U.S. Congress...for not maintaining the greenback as the stable spine of the global dollar bloc."
"But Ms. Waters and the House are hunting bigger game—to wit, the political allocation of credit."
"the politicians and the Wall Street Keynesians who cheered the stimulus are asking the Federal Reserve to save the day. Mr. Bernanke should tell them..his job is to maintain a stable price level, not to turn bad policy into wine."