And finally, he has argued for and fostered a ridiculously unsustainable spending binge by Congress which has destroyed The Federal Government's ability to effectively intervene when, not if, the next market crisis comes.
The facts are simple:
Bernanke intentionally allowed the growth of credit aggregates at rates of 50% to 100% faster than GDP over the last decade, a direct violation of the law governing The Federal Reserve and the underlying and necessary predicate for the bubble to occur. Bernanke was, in fact, the loudest Federal Reserve advocate of Greenspan's "easy money" policies after the 2000 Nasdaq market collapse.
Bernanke has willfully and intentionally ignored basic mathematical facts related to the growth in credit aggregates - specifically, that permitting credit aggregates to grow faster than GDP always must eventually, if maintained, lead to a massive credit bust. This is a function of basic mathematics - specifically, exponents. All the fancy "econometric models" in the world cannot violate the basic laws of mathematics.
Bernanke refused to regulate lending and securitization by the banks during the housing bubble despite the fact that the FBI issued a formal warning of massive fraud in 2004 and both HUD and Corelogic issued studies in 2005 and 2006 showing nine of ten borrowers in "ALT-A" loans had lied about their incomes. Without suckers to buy these worthless securities this irresponsible lending could not have taken place.
Bernanke's willful refusal to both conform with the law and regulate the banks fostered the environment in which they have and continue to asset-strip the citizens of this nation. Bluntly put the big banks are paying out 1% of GDP to a few thousand people not due to hard work, industry and innovation but rather due to rank exploitation and deliberate mispricing of risk with the costs of these outrageous and intentional acts shifted to the citizens of this nation.
Bernanke has intentionally concealed the terms and beneficiaries of bailouts and handouts despite multiple requests from Congress and The Press, has fought FOIA requests, has ignored Congress outright and just recently failed to fully comply, in the opinion of Representative Darrell Issa, with the Congressional subpoena issued by the committee on which he sits.
Bernanke has in fact been dead wrong on virtually every pronouncement he has made over the last ten years on economic matters, including claims that there was no housing bubble as late as 2006, that subprime was contained, that we would not experience a recession, that his policy prescriptions would stabilize the economy and job market and that if EESA/TARP was passed the stock market would not collapse. Each and every one of those claims was in fact wrong. A weatherman would be fired for a predictive record far better than Bernanke's.
Bernanke claimed, in sworn testimony, that he would not monetize the debt. While he was speaking - almost literally to the hour - The Federal Reserve was in fact monetizing $300 billion in Treasury debt and $1.2 trillion in Fannie and Freddie Securities - securities we now know are stuffed full of fraudulent mortgages that Fannie and Freddie bought during the bubble years.
Bernanke has refused to accept responsibility for his policies. He gave a major speech in January in which he defended not only his record but also the willful and intentional misapplication of his favored policy "pointer", known as The Taylor Rule. The author of that rule, a highly-respected academic professor, responded with a scathing (in academic terms) reply pointing out that "as written" Bernanke and Greenspan had held interest rates far too low for too long and thus fueled the speculative frenzy that led to this collapse.
Bernanke claims to have a plan to exit his "extraordinary measures" but has refused to explain that plan. This is likely because he has not supported the mortgage-backed security market, he is, in fact, the market, having now bought literally more than the entire net issuance in 2009! The reason Bernanke has not explained his exit strategy is simple: he doesn't have one.
Bernanke has willfully and intentionally ignored obvious and clear indications of front-running in the bond market while he has been running his "quantitative easing." There have been inexplicable pricing moves in the Treasury Market in the very specific issues that were then bought by The Fed just hours or days later. While there is no "smoking gun" proving that The Fed has communicated to certain market participants what would be bought, and then intentionally overpaid for those very same securities, it is impossible to look at this market's performance in an objective, statistical fashion over the last year and not reach the inescapable conclusion that someone, or a handful of someones, have been cheating.
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