Teflon Bernanke?

December 9, 2010, 8:09 PM UTC

Yes, yes, people hate the Fed. But believe it or not, they’re sort of OK with Ben Bernanke.

So discovered Bloomberg news last week in conducting a poll of a thousand Americans.

He is rubber and you glue

Of those surveyed, 39% said they believe the Fed’s independence should be reduced and 16% said the central bank should be abolished altogether. Republicans in Congress are talking about eliminating the Fed’s statuory responsibility for maintaining employment — just so it can focus on inflation, which going by the government’s numbers has been falling at a historic clip.

The poll is only the latest sign that people are growing more negative on the Fed, as Bernanke and his cohorts embark on a plan to boost demand for goods and services by buying $600 billion worth of Treasury bonds over eight months. 

Bernanke’s embrace of so-called quantitative easing has provoked various angry men to claim he is leading us into, take your pick, hyperinflation, a civil war or a world war.

The 55% negative response to the December poll is well above the negative level in a survey conducted in October, which found 43% of respondents wanted to overhaul or abolish the Fed, Bloomberg said.

The Fed’s unpopularity is well earned, of course, given its embrace of low-rate policies that fed the housing bubble and its failure to crack down on bad actors in the banking and mortgage industries. The Fed’s reluctance to cough up the goods on its emergency loans to banks and other big companies during the 2008-2009 crisis didn’t win it any admirers either.

Yet at the same time, it’s hard to imagine what might be really be gained by gutting the Fed. Yes, the central bank has been too willing to play along with politicians’ whims, which is what led to the low rates and the loose regulation in the early 2000s, but does anyone really believe the answer is to hand more control to Congress?

Accordingly, as unpopular as his policies seem to be, Bernanke himself seems to retain a reasonably high level of esteem. While only a third of respondents in the latest poll view him favorably, that’s more than the quarter who don’t. Few others in Washington would have a favorable balance, I suspect. Four people in ten had no idea.

To that end, there is the question of what most Americans actually understand about the Fed. The answer is not very much, one gathers. For example, if you type that hard-hitting question into Google, here are your top three results.

Is the Federal Reserve an illegal or legal institution?‎ – Jan 7, 2009
Does the Federal Reserve print money out of “thin air?” And if so ‎ – Apr 9, 2008
How many persons can a 17 pound turkey feed?‎ – Nov 10, 2006

The last question has been sort of the elephant in this rather overheated room, I think you’ll agree. I will let you know what I find.