Is Federal Reserve Chairman Ben Bernanke stoking inflation? Of course he is. Anyone with common sense knows that if you give $600 billion cash to the banks with no qualifications -- as he did with the second round of quantitative easing -- they will use it to speculate in the markets. JPMorgan Chase (JPM) just bought $1 billion of copper.
Bernanke's fatal mistake was that he placed no restrictions on what the banks would do with his $600 billion. If you opened the banks' books, you can bet that they've invested in commodities, currencies and foreign equities and bonds.
What Bernanke should have done was to sit down with the bankers and say: "Look boys, I'm giving you $600 billion, but you must lend it to U.S. businesses to stimulate our economy. None of this money is to be used for speculation or gambling in the markets." It's not too late to do this because QE2 runs until June.
But for Bernanke to say that inflation is not his fault is just nonsense. The idea of the $600 billion stimulus was a good one but it was botched from the beginning. You simply cannot give out $600 billion and let the bankers have a field day. That policy certainly is not helping to create jobs.
If you are running the largest central bank in the world, you need accountability. This, Bernanke does not have in QE2. When will we get a report on exactly what the $600 billion was used for? That's what the American people and leaders around the world want to know.