I was just doing a radio interview with CNN Radio and Dan Stewart, the host, raised an interesting objection to my thinking that the Fed is trying to stay apolitical. He said the Fed might intentionally be getting political or at least doesn’t care because Ben Bernanke thinks he’s out of the job if Romney wins. It’s a bit conspiratorial, but a really interesting idea that I hadn’t thought of yet.
Generally, the Fed would avoid being political at any cost because they’re intended to avoid politics as best they can. But Bernanke has held a very powerful tool in swaying market optimism and pessimism. If he really wanted to tank the market just before the election he could certainly have an impact through his QE communications. But what he hasn’t done or even come close to doing, is downplaying the potential for QE even in the face of an environment that makes the need for QE highly questionable. So it’s an interesting thought. Does Ben Bernanke hold the keys to the White House? And does he even care what Mitt Romney thinks given the fact that Romney has explicitly stated he would fire Bernanke if he wins?
This was a very very close race just weeks ago, but the polls are widening and the stock market’s huge surge isn’t hurting at all (just like the collapse hurt McCain in 2008). The recent stock market performance along with the polling numbers would certainly seem to favor President Obama at this point. And while I hate to stoke the conspiracy theorists, I do have to wonder to myself – if I were in Ben’s position might I be inclined to spit in the face of being apolitical because I know that the Presidential challenger is guaranteed to fire me no matter what?