Frustrated by the recent performance of the nation’s underachieving consumers, Federal Reserve Chairman Ben S. Bernanke said he was considering trading them away perhaps for a second- or third-rate bank and a hedge fund manager to be named later.


 

Frustrated by the recent performance of the nation’s underachieving consumers, Federal Reserve Chairman Ben S. Bernanke said he was considering trading them away perhaps for a second- or third-rate bank and a hedge fund manager to be named later.


Mr. Bernanke made his remarks following a talk at a luncheon in Minneapolis during which he upbraided consumers for their unwarranted lack of confidence.


The voluble Fed chief, whose bravado sometimes gets the better of him, told an audience at the Economic Club of Minnesota Luncheon in Minneapolis that the lack of buying being done by consumers was unacceptable.


“Even taking into account the many financial pressures that they face, households seem exceptionally cautious,” Mr. Bernanke said during his tirade.


He acknowledged that the absence of home construction and the deep and lingering pain inflicted by financial crises was playing a role in the nation’s economic struggles, and he warned again that reductions in government spending amount to reductions in short-term growth, but the fed chief refused to temper his disappointment in the effort put out so far this year by consumers.


“I am tired of the excuses, the complaints about the persistently high level of unemployment, the slow gains in wages for those who remain employed, the falling house prices, and the debt burdens that remain high,” Mr. Bernanke said. “I expect more out of consumers and I expect them to expect more out of themselves.”


He said he and his team have spared no expense putting the economy in a winning position, pointing out that the Fed and U.S. taxpayers have poured trillions of dollars into the country’s banking system. With that financial outlay, he said, comes certain expectations for everyone involved, including consumers.


“I have been out there talking to people on Wall Street and I can tell you things aren’t as bad as people think,” Mr. Benanke said.


Standing at a lectern covered with inspirational sayings such as “Spenders Never Quit” and “A Real Spender Gets Up After Being Knocked Down And Buys More,” the Fed chairman said he was at a loss to explain the behavior of the nation’s consumers.


“They are acting as if the economy is even worse than it actually is and that has to stop,” he said.


“Economic models based on historic patterns of unemployment, wages, debt and housing prices suggest that people should be spending more money,” Mr. Bernanke added, his voice rising in anger. “Instead, consumers are sitting on their money, holding back.”


He dismissed the notion that Americans are collectively suffering from what has been termed an economic version of post-traumatic stress disorder.


“So people are on edge, waiting for the other shoe to drop, so what?” Mr. Bernanke said. “Do they think they are the only ones with problems? I expect them to suit up and show up at the stores just like the commercial banks have been showing up at the Fed’s discount window. It’s time for the consumers to start doing their part. And if they aren’t up to it — and I’m beginning to wonder if they are — then we’ll have to find someone who is.”


Mr. Bernanke said China is always in need of more consumers and there was some interest in perhaps doing a three-way swap with Italy and Monaco in which the U.S. would end up with several free-spending international playboys in exchange for its consumers, but Mr. Bernanke said he wanted to make sure he is getting fair value for the nation’s consumers before trading them away.


“We’re ready to listen, but these guys have to remember that we match up pretty well with the rest of the world, even with the poor performance of our consumers,” he said, adding, “We’d like to do a deal with Canada, but they don’t seem too interested in giving up anything.”


Philip Maddocks can be reached at pmaddocks@wickedlocal.com.