As usual, the markets were hanging on every word of the Bernanke testimony to Congress today (Wednesday).
By now, everyone should know better.
In the years that U.S. Federal Reserve Chairman Ben Bernanke has been a member of the Fed – both as a member of the Board of Governors from 2002 to 2005, and in his two terms as chairman beginning in 2006 – he has been stupendously wrong time and time again.
Bernanke gave the markets what they wanted by hinting that his monetary easing policies won't change any time soon, pushing both the Dow Jones Industrial Average and the Standard & Poor's 500 Index up more than 0.5% in midday trading.
But when members of Congress started asking the Fed chief questions about whether those policies might be inflating bubbles in stocks and other assets, we got Bernanke testimony like this:
"To this point our sense is that major asset prices like stock prices and corporate bond prices are not inconsistent with the fundamentals….. our sense is that those issues [the threat of market bubbles] are still relatively modest."
That Bernanke would dismiss such serious concerns is no surprise; he's done it many times before, and often with disastrous consequences.
And yet, just as with Alan Greenspan before him, Bernanke's every public utterance has the power to move markets. Utterly baffling.
7 Examples That Show Why You Can't Trust Any Bernanke Testimony
Today's Bernanke testimony is only the latest example of how poorly he seems to grasp the many complex forces that threaten the markets.
The following seven statements from Fed Chairman Ben Bernanke's past show why no one should ever take anything he says seriously.
1. "We've never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don't think it's gonna drive the economy too far from its full employment path, though." (July 2005)
For the next two years, as the housing bubble continued to inflate, Bernanke repeatedly dismissed signs that a crisis was brewing.