Jacquelyn Martin/AP Photo
A serene-looking Federal Reserve Chairman Ben Bernanke, Oct. 2010.
Federal Reserve Chair Ben Bernanke has again become a political target of opportunity.
On Monday, Sarah Palin openly joined other conservatives bashing him for the central bank's recent decision to pump more money into the U.S. economy by essentially creating it out of thin air.
He's also being pilloried by officials abroad who warn that the Fed's latest action to get the U.S. economy's heart beating faster by opening the dollar spigot may hurt other nation's, especially developing ones.
Bernanke should be getting used to it by now. Ever since Spring 2008 when he had to step in with Bush Administration officials to help save Wall Street, he's been a frequent political whipping boy for critics on both the political left and right.
While Bernanke can't ignore the political realities, especially with Republicans, including Tea Partiers, preparing to take control of the House in January, like Fed chairs before him he can be counted on to try and appear impervious to such pressures.
Fed chairs pay attention to what global markets believe about the central bank. And the main thing they want them to believe is that the Federal reserve won't cave to political pressures.
That's because the Fed's greatest power derives from its credibility with the markets. If it loses that, nothing else really matters. Or so the thinking inside the Fed goes.
So the central bank strives to appear independent although its officials try to gauge the political currents like anyone else.
Against that backdrop, the Fed is now using what many experts believe is the last of its ammunition to try and boost U.S. economic growth, so-called quantitative easing or QE.
With general inflation super low (indeed the worry in recent years has been about the devastation of deflation) and unemployment high, the central bank isn't currently much worried about inflation, one of the two charges the Fed must most concern itself with by statute.
Its other responsibility, maintaining the highest possible employment level, is clearly where it's focusing its current efforts, and with good reason with an unemployment rate stuck at 9.6 percent.
Under these circumstance, the Fed would normally lower key interest rates — the federal funds and discount rates. But they're already effectively at zero or lower.
Which is where QE comes in. The Fed is now engaging in its second round of QE known as QE 2. By revising its balance sheet, it will create enough financial room to purchase $600 billion in long-term U.S. Treasury bonds.
The hope is that the additional cash banks find themselves with will be used to extend credit to businesses and consumers.
It's the equivalent of a Hail Mary pass but that's what you do when you run out of other options.
The calls for the Fed to restrain itself, or "cease and desist" as Palin said Monday, will likely grow, especially if the Fed decides to pump another round of stimulus into the economy with QE3.
But it would be an extraordinary event if Bernanke said "OK, we'll stop" or even suggested publicly that such criticisms played a role in Fed actions.
Fed chairs have hung tough, under even greater political pressure than Bernanke is currently feeling, such as when in the early 1980s then-Fed chair Paul Volcker forced interest rates into the painfully high teens in order to successfully crush inflation. The caterwauling then makes today's criticisms of Bernanke sound downright sedate.