Small business consultant Gene Marks explains why he's eager to see Federal Reserve Chairman Ben Bernanke serve a second term
This week Ben Bernanke and I bought a new car for my small business. I traded in my beloved 2007 Jeep Wrangler. Very noisy. Very bumpy. The roof leaked. Sometimes it shuddered violently on the highway. As a five-foot-five middle-aged, balding man with three kids, I looked ridiculous behind the wheel. Apart from that, it was a really fun car. Except that my wife hated it. Last week I decided it was time to grow up and get something more appropriate. Ben Bernanke and I bought a 2009 Nissan Murano. Not a bad choice for a couple of middle-aged, balding guys. You've probably figured out that Federal Reserve Chairman Bernanke didn't accompany me to a Nissan dealership in Delaware to buy my new Murano. He's got other things on his plate: the recession, the credit crisis, and his looming reappointment. easy credit, hanky-panky, weak dollar
That's why I decided to buy this new car. It seems inevitable that Bernanke will be reappointed as Fed chairman. I like what he's done so far. I'm confident, as a small business owner, that he'll do a good job over the next four years. I'm O.K. to buy the vehicle. Plus my wife threatened divorce if I didn't get rid of the Jeep before Christmas. Plenty of people would disagree with me about Bernanke. Some blame him for the easy credit environment that led to the latest financial crisis. Others blame him for not doing enough to stem financial industry hanky-panky that contributed to the problems. Still others are convinced that the increase in the money supply under his watch has caused our dollar to weaken, inevitably resulting in higher inflation. That's all beside the point. My beloved Jeep is gone. My wife is happy. Ben Bernanke's probably going to get reappointed to another four-year term at the Fed. So what can small business owners expect? For starters, give the guy some props. He's studied and written extensively on the Great Depression. In the past couple of years he had the chance to put his years of study to good use. The result? There was no depression. We are in a recovery. Sure, there are some trouble spots in the economy. Sure, he made some mistakes. But he kept the financial system sound. My small business was able to deposit money, cash checks, and send wire transfers through all the turmoil. The lights didn't go out. There was gas for my beloved Jeep. If, God forbid, a similar panic hits again, I think Bernanke is as equipped to deal with the situation as anyone else out there. A lot of small business owners have blamed the Fed for the tight credit market. Bernanke has publicly stated his concern about tight credit, particularly for small businesses. He's no stranger to small business. In fact, his family ran a small business in South Carolina when he was a kid. He's provided as much liquidity as possible to a financial services industry that's still getting over a catastrophe. It's going to take time for the industry to recover. It will happen. Even CIT Group (CIT), one of the largest lenders to small businesses in the country, is emerging from its Nov. 1 bankruptcy this month. Bernanke's actions are helping lenders get back on their feet. That's a good thing for small businesses. Bernanke: A fellow balding Darwinian?
Another thing I like about Bernanke: He's power-hungry, but for the right reasons. He's overseen the most expansive use of the Fed since the Great Depression. Yet he doesn't want the Fed to be subject of government oversight.
He doesn't want members of Congress getting involved in bank regulation. Gee, why would that be? Is it because he, like the rest of us, is extremely wary of these guys after watching them run up a trillion dollar deficit? Or maybe he's concerned about a Congress that wants to take money that wasn't spent from TARP…and spend it on government programs. Bernanke taught at Stanford, New York University, and Princeton. He's a lot smarter than most of the politicians in Washington. And I'm not saying that because he's a fellow bald guy. Small business owners know the importance of giving authority to the right people. Let Bernanke and all the future qualified heads of the Fed have their power. Not Congress. That doesn't mean that he shies away from banking regulation. In fact he supports more regulation. He supports punishing banks for unnecessary fees. He doesn't think some organizations are "too big to fail." As a business owner watching other poorly run businesses fail in this recession, I also support Darwinism. I approve of a guy at the Fed who appears to feel the same way. Leave dollar values to politicians
What will truly come home to small business owners is inflation, interest, and the weakness of our currency. Bernanke believes in inflation targeting, which means that he envisions managing an economy around a stated, low inflation rate. I grew up in the 1970s, so I know that inflation's always been a concern. Yet during the four years of Bernanke's rule, inflation has never been more than 4%. Bernanke has also said again and again that he's aware of the potential inflation that could result from the measures he took to provide liquidity to the system. He says he has the capability to fight it. What he means is interest rates. To keep inflation under control, Bernanke will raise these rates. I believe him. Smart business owners are O.K. with this. Interest rates have been at an historic low during Bernanke's tenure. We like it when the guy fighting potential inflation says he's prepared to raise them if that's what it takes. Finally there's the weakness of the dollar. Is this caused by increased money in circulation? Ballooning deficits? Low rates of return? The slow economy? It's probably a combination of all these factors. The reality is that most small business owners aren't affected by a weak dollar unless we travel or sell/buy a lot from overseas. The strength of our dollar is more of a political problem. And Bernanke has said he doesn't interfere in politics. I believe he'll keep a close eye on the money supply and leave the rest to the politicians. So to show my confidence in the economy and our Fed chairman, I bought that new Nissan this week for my business. I financed it, too. I'll depreciate it over five years and hopefully drive it another five years after that. Then I'll trade it in for that 350-Z I've had my eye on. Maybe Ben and I will both be retired by then. Maybe I'll take him and my wife out for a spin. Oops…that car's only got two seats. Sorry, Ben.