“Former Federal Reserve Chairman Alan Greenspan has some words for Republican politicians criticizing his successor Ben Bernanke: Back off.
Republican hopefuls Mitt Romney, Rick Santorum, Newt Gingrich and Ron Paul have all criticized Bernanke for his loose monetary policies, even calling for his ouster as the head of the U.S. central bank.
“Anyone has the right to criticize Federal Reserve policy, but it is wholly inappropriate and destructive to engage in ad hominem attacks,” Greenspan tells the Financial Times, adding that he had been “very much impressed with the depth of his [Bernanke’s] skills.”
President George W. Bush nominated Bernanke, himself a Republican, to be chairman of the Federal Reserve in 2006.
Bernanke has faced a barrage of criticism for failing to foresee the financial crisis beforehand as well as for his loose monetary policies in wake of the downturn, including keeping benchmark lending rates to near zero, pumping trillions of dollars into the economy to reanimate it and support for other stimulus measures such as the Troubled Asset Relief Program.
Critics says Bernanke’s policies will fuel inflation down the road.
Newt Gingrich has said Bernanke has been “the most inflationary dangerous and power-centered chairman in the Fed history,” according to ABC News, while Mitt Romney has reportedly said he’d “be looking for somebody new” as have other candidates.
Easier said on the campaign trail than done.
“The notion that Fed board members, once appointed, can be ‘fired’ by the president for their ‘policy views’ is inaccurate. Policy views are explicitly protected by statute,” Greenspan says.
Bernanke, meanwhile, brushes campaign criticism off, telling ABC News “it sort of comes with the job.”
“The Federal Reserve is nonpartisan. Our job is to do the right thing for the economy irrespective of politics,” Bernanke tells the network.
“We’re not paying any attention to election calendars or political debates. We’re looking at the economy. We want to make the right decision. We want to do it without political pressure.”
Criticism of the Fed’s loose policies aren’t limited to politicians.
“The Fed got out of the central banking business many years ago and is now in the central planning business,” Jim Grant, founder and editor of Grant’s Interest Rate Observer, tells CNBC in an interview.
“I think the Fed ought to get out of the manipulation business. It ought to begin normalizing interest rates.”
Staying the course
Bernanke remains optimistic that his policies will bring the U.S. economy back to better days although it will take several years before the unemployment rate falls to pre-recession levels of well below 6 percent from the current rate of 8.3 percent.
“I think there’s a reasonable chance, looking at the long-run history, that the U.S. economy will return to healthy growth, somewhere in the 3 percent range,” Bernanke said at a recent lecture to George Washington University students, the Associated Press reports.
The economy grew 3 percent in the fourth quarter of 2012, although economists warn that pace will slow for the first quarter of 2012.
Weekly initial jobless claims have come in a little higher recently, stoking fears that while the economy is recovering, it’s doing so at a sluggish pace
Initial jobless claims fell 5,000 to a seasonally adjusted 359,000, according to the most recent data, worse than market forecasts for 350,000.
“The data today is evidence that we’re not going to have the robust recovery we had been expecting. The economy is growing, and the labor market is healing, but both on a very slow basis,” says Michael Yoshikami, chief executive officer at Destination Wealth Management in Walnut Creek, California, according to Reuters.”