Who's Afraid of the Big Bad Federal Reserve?

Ben Bernanke's watery, sleepless doe eyes stared placidly at Scott Pelley of 60 Minutes. He spoke softly, but he did not carry a big stick. His face twitched nervously and his lip curled unnaturally. His body language told me to be afraid... be very, very afraid. This was the man trusted with chairing the Federal Reserve and overseeing the economy... you know, the economy that's tanking. It was under his watch that all these regrettable subprime mortgage scams prevailed, banks dried up and stopped lending, the biggest bail-out in history was passed, and 8.5 million jobs were lost.

That's all old news, of course... but what worries me is that Bernanke is openly unhinged about two aspects of the economy -- the unemployment that he says will "likely take five to six years to recover," and worse yet, the possibility that our low inflation will lead to declining prices, falling wages, and a downward spiral much like the Great Depression. To be optimistic, Bernanke tells us that the housing market can't get any weaker: it's already at rock bottom. That's hardly a vote of confidence.

Predictably, this master of financial voodoo is still trying to convince us that the best course of action for the economy is more from the Federal Reserve. The only thing propping us up right now, Bernanke tells us, is the Fed's buying up of Treasury securities to keep interest rates low. He wants to clean up the tax code, close loopholes, lower rates across the board. He wants more regulatory power and oversight of financial institutions like Goldman Sachs and AIG. He believes better education will close the gap between rich and poor.

But as hopeful as Bernanke tries to be in his description of possible solutions, his demeanor tells us he's freaked out. His last words in the interview was, " I think that in the longer term the United States will retain its leading position in the world. But again, we gotta get there. And we have some very difficult challenges over the next few years." Yet, in Bernanke's worst nightmare, the entire budget will go toward Medicare, Medicaid, and debt interest, leaving the country with no defense budget -- completely disarmed and helpless.

Perhaps a new type of nightmare is coming to the Federal Reserve, however. In 2011, Ron Paul will head the House Subcommittee on Monetary Policy. This rogue Libertarian will be in charge of the oversight of Bernanke and cronies. Ron Paul's contempt for the Federal Reserve is not very secret. This week, CNBC asked him, "So you've written a book titled 'End the Fed'. Do you still want to eliminate the Federal Reserve?" His response was, "Oh sure, but I think the Fed will end itself before I'm able to do it."

One can only wonder what sort of wild ride is ahead -- both for Bernanke, with his dreams of heightened power, and for the fragile economy that's propped up by cooked books and crooks.