Well, I suppose this is one reason why we won’t get hyperinflation.
Bernake wants a Nobel Prize, not a clown suit…
This is the fear of most hard-money analysts. They see the Federal Reserve as the ultimate engine of hyperinflation. It could become this, if its senior decision-makers use Robert Mugabe as the model. I do not think The FED’s Board will do this. Mugabe is the laughing stock of the world. No one in the West wants to go down in history as the equivalent of Mugabe.
The many books that predict hyperinflation ignore this. They assume that what happened after World War II in Hungary or after World War I in Germany and Austria is in some way typical of what Central banks do. It is in Latin America. It is in African tribal cultures. But it isn’t in Western industrial societies. To be labeled a South American central banker would be a mark of failure in the West. No central banker wants to wind up in the footnotes as his country’s equivalent of Dr. Gono, the head of Zimbabwe’s central bank in its time of hyperinflation. (He received his honorary doctorate from the University of Zimbabwe.) Its website barely functions. It tells you what its policy is in a series of PDFs that download very slowly and which provide such wisdom as this:
Gono has done very well, of course. Wikipedia describes his lifestyle.
There is no way that Dr. Bernanke has profited, or will profit, to this degree. What is standard practice in Zimbabwe is not acceptable in the West. So, central bankers must satisfy their plans for personal success with applause from their academic peers, plus the legislature.
This means that the Federal Reserve is not going to serve as the lender of last resort to the government – only to the four largest banks, which control over half of the nation’s bank assets. The FED is not going to oversee the destruction of the dollar, along with the purchasing power of the FED’s retirement portfolio – fully vested – of its employees. They know where their bread is buttered. Take a look at the FED’s retirement plan’s portfolio.“