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Interest Rates

Man of Steel vs. Ben Bernanke

Ben Bernanke, Federal Reserve, FED Chairman


Superman and Federal Reserve Chairman Ben Bernanke are both mild-mannered. They are both calm, even in the face of global disasters. They are both sometimes said to be from other planets.

Superman wears an "s" on his chest. Where he comes from, it's a symbol of hope. Mr. Bernanke prefers the "$". Where he comes from, there is no problem that this symbol cannot solve.

Superman is known as the "Man of Steel," the title of a movie to be released on Friday. Mr. Bernanke could be called the "Man of Steal" given low-interest rate policies said to widen the gap between rich investors and poor retirees living on fixed incomes.

Both men defy gravity. Superman can leap buildings in a single bound. Mr. Bernanke is nicknamed "Helicopter Ben" for dropping money from great heights, as his mentor Milton Friedman, famously suggested as a way of fighting deflation.

Superman fights for "truth, justice and The American Way." Mr. Bernanke fights for "globalization," even to the point of providing cheap U.S. dollars to foreign banks.

Both men come from a 1930s mindset. The first Superman comic came out in 1938. Bernanke traces his economic thinking back to the same year as a student of the Great Depression.

Superman sometimes wears his underwear on the outside of his tights. Mr. Bernanke more modestly keeps his skivvies beneath his suit, but he works hard to be transparent.

Both men face challenges that are beyond their powers. For Superman, it's kryptonite. For Mr. Bernanke, it's the unemployment rate.

Superman, unlike other superheroes, is rarely, if ever, mistaken as a villain. Mr. Bernanke isn't so lucky. The left fires at Mr. Bernanke for not doing enough to ease the jobless rate. The right fires at him for printing money, enabling Washington's unprecedented debt binge and punishing savers with low interest rates.

Bullets bounce off both men. It was not even a year ago when GOP presidential candidate and Texas Governor Rick Perry called Mr. Bernanke "treasonous." Mr. Perry also added a line that would have alerted the Secret Service if any other yahoo had said it: "If this guy prints more money between now and the election, I don't know what y'all would do to him in Iowa, but we would treat him pretty ugly down in Texas."

Both Superman and Mr. Bernanke are misunderstood. Some pop-culture critics believe the Superman character was modeled after Jesus or Moses. Some economic critics believe The Fed chairman is supposed to be modeled after the intellectual founder of capitalism, Adam Smith. In truth, Superman is just a cartoon, and so is the idea of a free market. Mr. Bernanke's charge, in fact, is to promote maximum employment and stable prices--which means constant market intervention. And if the entire economy blows, he's supposed to become the buyer of last resort, which is exactly what he's done, and why he's a hero.

But here's where the whole Superman thing breaks down.

Mr. Bernanke has performed only the first half of a heroic feat. He has lowered interest rates to nearly zero, bought up trillions in Treasuries and mortgage backed securities, and defied critics who swore this would result in hyperinflation. All along, he has been right. He has arguably saved the world from much worse consequences. He has re-inflated the stock market to new heights, rekindled a bombed-out housing market, and at least turned the tide on a tsunami of unemployment.

Now, to complete the mission, all he's got to do is put everything back the way it was so the financial world can return to normal. He must taper the Fed's unprecedented bond-buying as the economy recovers--picking the precise moment in time, easing back in just the right amounts--so as not to panic the whole world back into crisis mode.

Whether history will regard Mr. Bernanke as a hero or a villain depends on this slick move. A lot of people thought the last Fed chair, Allen Greenspan, was Superman, until his super bubble blew just after he retired. Before Mr. Greenspan, just the opposite happened. People thought Paul Volcker was a villain for jacking interest rates up to the moon, but now he's down in history as our inflation-fighting hero.

Mr. Bernanke could stay on as Fed chairman and fight to cement his superhero status, but he's apparently not seeking re-appointment when his term ends in January. I can't imagine Superman backing down to such a challenge.

Imagine an asteroid about to hit Earth. Unlike Mr. Bernanke, Superman actually sees it coming. He flies out to it, but it's as big as a multitrillion-dollar portfolio of credit derivatives. He can only deflect its course by the slightest of degrees. He has enough power to keep it from colliding, but the giant rock falls into an unstable orbit around the planet.

Superman is exhausted and must return to Earth to recuperate as the asteroid still spins around out there, deflected only for the moment. Will he find his strength and return to the skies to save us?

Or will Superman's term expire, leaving the job to some lesser super hero? Like maybe Green Lantern?
