One thing is for certain: Bernanke is committed.  But so is a one-trick pony.  However, is blind commitment to a theory a virtue or a frailty?

The Federal Reserve chairman continues to push the chips out to the center of the table with both hands.  He knows that low interest rates create employment.  He is certain.  Well, pretty certain.  There is one complication though.  They have not. 

In a corporate board room, the discussion might revolve around this question: "What are we missing?  That which we believe should work indeed is not working.  Should we reassess and revisit our theories?"  When it is your money at risk, questions like this arise.  When it is not, one apparently becomes married to a theory.  Being stubborn with your own money is usually a poor decision.  Being stubborn with other people's money merely risks one's reputation and place in financial history.

Bernanke might wonder if this theory of low rates begetting greater employment is indeed effective in today's complicated world.  Does it apply to a country that is essentially one massive service economy, in a world where China manufactures and exports our tangible needs, where banks are internationally bound to one another, and where unemployment ranks are swollen by those drawn into our country by a Cadillac safety net of government programs?

The Wall Street Journal on December 13 opined that more stimuli from the Fed are akin to a call for more "cow bell," a reference to an old Saturday Night Live skit.  I made that same connection back in an American Thinker blog in September of this year. 

Now there are hints that perhaps Bernanke will seek a quiet exit from his chairmanship.  To the next Fed chairman he will be saying, "Here is my hand [a near-$3-trillion balance sheet].  There is the bet [the $2.2 trillion above the balance sheet I inherited].  Good luck." 

As in physics, and per Newton, for every action, there is an equal and opposite reaction.

So it is with economics.  Bernanke's policies are lame and destructive to free markets.  Decision-makers and trigger-pullers, the lenders and the investors, are fully aware that these fantasy rates are as fake as wooden coins.  Currency values decline; disposable income is taken from the private sector due to the lack of fair return on investment and lending.  Return seekers are herded into high-risk, low-return positions.  The velocity of money plummets.  Government borrows heavily.

The net result is that the once "fair return" on money is now being withheld from the private sector by the federal government via Federal Reserve actions.  That money, in effect, remains with the government to be spent and doled out per their immeasurable wisdom.  The result is that the most inefficient allocator of capital has more to allocate.  The most efficient allocator, the private sector, has less.  Roll over, Newton.

Our Federal Reserve is officially charged with promoting maximum employment, stable prices, and maintaining moderate interest rates.

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates.

The last item of this statement, "moderate interest rates," seems to be an ignored directive.  Moderate interest rates provide a moderate return on investment and a moderate support for the currency.  The Federal Reserve's mission statement makes no mention of creating inflation or setting interest rates at what are clearly not moderate levels.

The Fed is on record as seeking a 2.5% inflation rate.  This is an outrage and clearly outside the scope and mission statement of the Fed.  In a sense, it is in direct conflict.  What price stability is there in an inflation rate which doubles prices every 28 years?  Bernanke and others seem to believe that they are bound by some mandates but also have the liberty to author their own.

We have witnessed the evolution from what was initially an emergency response into a seemingly permanent condition.  The Federal Reserve has become the fourth branch of government -- unelected, unmonitored, and apparently the author of its own mission statement.  From a temporary fine-tuning mechanism for banking, this entity has now morphed into the most powerful branch of government, in which academics can wager the wealth of a nation on a pet theory.

On one hand, the nation's financial health and future are at risk.  On the other hand, Ben Bernanke's place in financial history is on the table.  Hardly an equitable arrangement.