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Comment by byrneseyeview | Hacker News Reader

But it's really more like his choices are:

a) His $1 million earns ~3% interest and depreciates by 2% per year, or

b) His $1 million earns ~4% interest and depreciates by 3% per year.

You're arguing that these guys are promoting multi-trillion dollar swings in the country's wealth in order to earn a couple more basis points on their investments. If you're going to posit a Greedy Ben Bernanke, why is he being so slow and cautious? He can probably make, at most, 1% per year extra by manipulating the value of the dollar. Or he could take a suitcase full of cash.

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Additionally, he probably doesn't even know which choice will make him money.

Most likely his money is managed in a blind trust, which means he has no control or knowledge over how it is invested. For all he knows, inflation will help his portfolio. In the most likely event, his money is invested in a mix of equities, stable funds and bonds, and all his money does is track the general health of the economy (with a smaller upside/downside due to hedging and diversification).

I understand that legally this is the way it's supposed to be, but do you really expect us to believe that Bernanke doesn't understand what's in his portfolio? Come on...

You're also dismissing the social wins aspect of this: you definitely can't argue that Bernanke doesn't know the way his friends are betting, even if he's "blind" to his own portfolio. Bernanke doesn't have to win directly off this for there still to be a possibility of him making corrupt decisions that help both him and his social network.

I understand that legally this is the way it's supposed to be, but do you really expect us to believe that Bernanke doesn't understand what's in his portfolio? Come on...

Bernake doesn't know what's in his portfolio, because his money managers don't tell him. That's why many agency heads are required to put their money into a blind trust. If you have evidence to the contrary, by all means notify the proper agency (I think OTS, not really sure).

As for Bernake's friends, I expect most of them don't tell him (or anyone else) how they are betting. If I tell you my trading strategy, you can turn around and take my money.

You're acting like Bernankes friends are sitting around at a poker table, when in fact they are the house and we are all playing blackjack.

Agreed. Aaron's claim is making money in a very indirect way. Making money in the market is hard enough through direct means (purchase a security watch it go up). I would say it would be even harder to purchase something then move the inflation lever up or down in hopes to manipulate their personal wealth would be much much harder. Plus that also means that they can agree on a set of securities they wish to target which I would say is less likely than a cold day in hell. Not to mention the amount of money they lost and haven't gotten back is pale in comparison holding inflation at 3% instead of 4%.

What I would argue is that Bankers and Wallstreet just want it to go back to what it was. They're trying as hard as they can trying to build a time machine to go back before everything fell apart, and resisting all attempts at changing for the better. They just want this to all go away. So given the choice they want that lever to make everything as it was before which is impossible.

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