Bernanke can't deny Greenspan's murder of the U.S. dollar because Bernanke is Greenspan.
Put aside for a moment the Federal Reserve Banking system's impairment of free-market capitalism with its supply/demand override of the price discovery mechanism when it artificially, (and for the most part arbitrarily) sets interest rates at levels that only a command-and-control soviet era member of the politburo could love.
If you want to understand why the US dollar is doomed, what drives current Fed policy, Alan Greenspan's recent veiled mea culpa in the Financial Times on April 7 ("The Fed is Blameless on the Property Bubble"), and the current global market meltdown, keep in mind Alfred Hitchcock's Psycho, but with financial derivatives instead of carving knifes.
Greenspan is Mrs. Bates, the mummified corpse sitting in the attic of the Bates Motel; her transgressions (Greenspan's embrace of the so-called "New Economy" in the late '90s) have incensed protege Ben Bernanke (Norman Bates) who feels betrayed and erupts in homicidal interest rate slashing tirades. Caught in the middle is the living embodiment of the U.S. dollar, Marion Crane (Janet Leigh).
Greenspan is supposed to be effectively dead and hanging out at Davos with Bono and Geldof ogling Sharon Stone and supporting third world dictators embracing American style Caligula Capitalism, but he's undead. He's a walking Fed mummy whose ghostly voice can still be heard. In his April 7th, Financial Times letter he writes; "I do have an ideology. So does each member of the forum. I trust our views are subject to the same standards of evidence that apply to all rational discourse. My view of the the efficiency of global capitalism has evolved over the decades as new evidence has appeared contradicts some earlier judgments and confirms others. I have been surprised by the fierceness of investors in retrenching from risk since August."
Translation: Everyone is entitled to their own wrong opinions, but I'm still not taking responsibility for my screw ups when I drank dot-com "New Economy" Kool-Aid and forced interest rates "irrationally" low (compounding the error by also inflating the real estate bubble). But hey, I was eying Washington D.C. hottie Andrea Mitchell so I needed some NASDAQ street cred. When it turned out I was completely wrong, I got nervous about my own monetary situation so I started promoting Bush's smash-and-grab tax cuts and my banking buddies' predatory Adjustable Rate Mortgages. Maybe I did turn the entire global economy upside down and shifted economic power from America to the Mid and Far East. Maybe I did force global inflation higher, and global wages too, to the point of imploding the U.S. banking Ponzi scheme (and the U.S. dollar) faster than Building 7 on 9/11. But don't blame me for the credit seizure, blame those bankers at BearSteans who aren't peddling fake bonds anymore and blame the Americans on bread lines who aren't buying fake mortgages anymore. I'm blameless. Ask Queen Elizabeth II, she knighted me.
Contrast this with Bernanke's recent testimony before Congress: "A recession is possible."
Translation: A recession is here.
Enter Marion Crane. She works as a secretary in a bank. She dreams of flipping her mobile home for several million dollars. As far as she's concerned, there's nothing to worry about as she pulls into the driveway of the Bates motel.
She's carrying a $40,000 wad of cash (an inflation adjusted $300,000) that she extracted (stole) from her banker boss and his rich client, a clownish real estate developer (think Jimmy Cayne and Donald Trump). Her idea is to use the $40,000 as collateral to buy 40 billion dollars worth of Dow stocks and maybe the Bates Motel itself in a leveraged buyout.
In the famous shower scene, Marion is hacked to death by Norman "Bernanke" Bates, the cross dressing psychotic twin of Alan Greenspan who can't control long term interest rates from raging. Marion's liquid net worth (blood) is washed down the drain; mixed in with a massive credit expansion raining down from the open Fed spigot (the Fed's various multi-hundred billion economic stimulus packages -- also going down the drain).
How does this horror show end?
Marion sister's husband Sam Loomis (John Gavin) investigating Marion's disappearance saves Marion's sister Lila Crane (Vera Miles) from lethal, unregulated derivatives wielded by Bernanke as he tries to debase the currency with more credit expansion and bloodletting. In the remake Sam is played by Paul Volcker.
Forensic psychiatrist and accountant Dr. Fred Richmond (played in the remake by Peter Schiff), explains to the Chinese authorities, who now own most of America, that Greenspan, though effectively dead, lives on in Bernanke's psyche so he fights inflation by psychotically easing credit and printing more worthless U.S. dollars. The result is rising commodity prices and global starvation. Rising commodity prices are not the cause of inflation, but merely a symptom of the true cause of inflation; loose Fed policy, the very thing Greenspan-Bernanke were supposed to avoid, Schiff explains. By trying to save the U.S. economy, they killed it.
In the meantime; this just in...
NEW YORK (MarketWatch) -- The Federal Reserve is exploring backup options to extend its lending power in case the recent plans it has implemented to loosen the credit markets are unsuccessful, The Wall Street Journal reported on Wednesday.
These backup plans include having the Treasury borrow more money than necessary to fund the government and keep the excess proceeds on deposit at the Fed; issuing debt under the Fed's name instead of the Treasury's; and asking Congress for authority for the Fed to pay interest on commercial-bank reserves instead of waiting until a previously enacted law permits it in 2011, the report said.
cue Bernard Herrmann's screeching violins and violas; Eee, eee, eee.