Trouble at the Fed

In persistent denial that it was ample liquidity in the first place that caused the present dire economic situation, the head of the Fed holds the view that "too little inflation" has been the true threat all along. Fear of deflation is Ben Bernanke's recurrent nightmare. In fact, his deflation worries form the basis of the so-called Bernanke doctrine, which says that the cure is monetary expansion and, consequently, holding interest rates as low as possible.

Since his first days at the Fed, as a member of the Board of Governors in 2002, Bernanke has promised to be a big printer of money. And since he took over the helm from Greenspan as chairman of the US central bank in 2006, he has fully lived up to this pledge.

Bernanke is still trying to reinflate the housing bubble which was largely responsible for the recent crisis which he, with the help of Congress trying to make housing more affordable, was encouraging with artificially low interest rates.