April 23, 2014
Former Fed Chairman Ben Bernanke doesn’t regret much about the Fed’s actions during and after the financial crisis, he told the Economic Club of Canada on Tuesday, during a speech for which he was most likely paid a small fortune.
So he doesn’t regret that the Fed, under his reign, handed out trillions of dollars to the largest banks and corporations, US and foreign, to teach them once and for all a crucial lesson, that the Fed – and hence the public at large – would always be there for them when their horrid and reckless bets got them into very predictable trouble; that the Fed would always do whatever it would take to fan inflation in order to raise corporate revenues and profits, whittle down real wages, and inflict financial repression on savers.
He doesn’t regret either that the Fed has destroyed what was left of the financial markets as a means of price discovery. Nor does he regret that the wealthy were bailed out during the financial crisis and that they have then become much wealthier while the rest of the people were left to struggle the best they could with the conditions the Fed has created.
But there’s one thing he does regret: that he wasn’t able to explain the Fed’s actions well enough to the vast majority of Americans, namely those who’ve gotten shafted by the Fed’s very actions. “They think somehow or another that we favored Wall Street instead of favoring Main Street and that’s unfortunate,” he said. “I still think there are a lot of people out there who really don’t understand why we did what we did.”
For sure for sure. But there are a few people out there who do understand: the billionaires, or those who became billionaires during the worldwide money-printing and interest-rate repression binge. It’s been one heck of a bonanza for them.
Just today, the world’s 200 richest people made $13.9 billion. In one single day, according to Bloomberg’s Billionaires Index. That’s big bickies, as my friends from down-under might say.
We may quibble over the accuracy to the penny of these net-worth estimates, and their daily changes, but Bloomberg is pretty confident, even concerning assets that are not publicly traded. And in case of doubt, they’re left out, Bloomberg explains in its Methodology. And so here is the crème de la crème:
Steven Cohen, founder of SAC Capital Advisors, the hedge fund that got embroiled in a mega-criminal insider trading scandal which it settled by agreeing to pay a $1.2 billion fine and stop managing funds for outsiders – well, he made it to the front of the lineup today with a gain of $2.3 billion for a day of blood, sweat, and tears.
Sheldeon Adelson, CEO of a gambling empire in Las Vegas and Macao, among other things, wasn’t that far behind with a gain of $1.9 billion for today.
Mark Zuckerberg, whose Facebook puts the NSA to shame with its all-encompassing worldwide personal-data dragnet and internet surveillance expertise, saw his net worth jump by $763 million today.
Amancio Ortega, Spanish fashion mogul, was in fourth place. The millions of unemployed Spaniards, and the lucky ones who have jobs but whose real wages have been decimated so that companies could become more “competitive,” would be proud of him. At least some people are doing well in Spain! He booked a gain of $734 million today.
Stefan Persson, Swedish business mogul, saw his wealth grow by $576 million. Elon Musk, hype-machine extraordinaire and CEO of, among others, Tesla which sells about 2,000 cars a month, pocketed $558 million [read…. Tesla’s Sales Stall, Don’t Even Amount To A Rounding Error].
Our favorite Uncle Warren Buffett, whose financial and insurance empire was bailed out by the Fed and who has become one of the largest beneficiaries of the “bold” policies of central banks worldwide, only made $417 million today, barely enough for 7th place. Tsk, tsk, tsk.
Bernard Arnault, richest mogul in France, CEO of luxury-goods empires LVMH and Groupe Arnault, who applied for Belgian citizenship in late 2012 to escape newly elected President François Hollande’s tax strangulation, but then abandoned his application in April 2013 under withering ridicule and political pressure – well, he scraped by with a gain of $408 million today. His beleaguered compatriots probably have no clue.
This is the Fed’s “wealth effect,” on a daily basis, as seen from the top. It’s a construct that the Greenspan Fed conjured up out of thin air and presented to the incredulous American people as a valid economic theory. Bernanke then promoted it to the Fed’s stated raison d’être. His theory: if we immensely enrich during years of bailouts, money-printing, and interest rate repression the richest few thousand people in the world, everyone would be happy somehow.
And so central bankers, with glowing support from the bondholder bailout organ, the IMF, inflated by hook or crook and for over five years the prices of assets that these chosen few were holding, and they gave them free money to acquire every asset insight and drive up values even further. It all worked out wonderfully and like clockwork for over five years, and the numbers of this “wealth effect” are truly impressive as we can see above. The only thing that Bernanke regretted not doing, based on his own admission, was to explain the whole noble construct to the American people.
There is nothing like a wealthy central bank chief admitting that he wants to, one, help governments default gradually on their debts; and two, cut the real wages of those less lucky than he – an honesty the Fed never dared to exhibit when it inflicted waves of QE on American workers.
Gold Goliath is not your typical gold dealer.