Not only did the Beard of Understanding land some prime modeling gigs on the success of his Times spread, but he's reached the penultimate step toward being named Most Popular girl in school (all that's left to do is blow the editor-in-chief of the year book, who tallies up senior superlative ballots). A new CNBC survey of "Wall Street professionals" shows a waning faith in the economy at large but a waxing faith in he who would sooner say the 'r' word than engage in that or any other hair removal process. Thirty-nine "money managers, investment strategists, and professional economists" gave Ben a "B" for his work this month, up from January's "B-." It would've been an "A-" but Charlie Gasparino's mechanic said he was "less than impressed" with the Chairman's work, and failed his Harvard ass.

Fed Chairman Doing Better, But the US Economy Isn't [CNBC]

There's a lot to love in this interview with Neil Cavuto and Don Trump (Cavuto's expressions (he's definitely been practicing these, go to 9:02 and tell me I'm wrong); Cavuto's jokes (DT: "Ben Bernanke could've been a leader, instead he was a follower" NC: "He should've read Think Big And Kick Ass In Business And In Life") ; Cavuto's ass-kissing ("I love when you say 'You're fired,' I love when you do that") but if I had to choose my favorite moment I'd go with:

Trump: If i were president right now, you'd have $30 oil. I would call up Saudi Arabia and say "That fucking price is coming down and it's coming down now" and you know what? They'd lower that price so quick and it'd be so easy.

Cavuto: What if they didn't?

Trump: They will.

(While I'm stroking it, I'm also saying, please do not question my judgment in agreeing to pose like this. Not that I have to defend myself to you, but I think this is exactly the way America would like to see its Fed chairman, at this time especially. Anyway. Email me for the pics that didn't make it to print: beardofunderstanding (all one word) at yahoo dot com.)

The unintentional Seinfeld reference that made us giggle today - Bernanke's move on the U.S. economy is to stop short, emulating great central bank economists and driver's seat molesters. Bernanke didn't offer any inkling that rates would be cut at the September 18 FOMC meeting, disappointing Wall Streeters convinced that their whining was driving the Fed's actions.

Many economists think the Fed will cut rates, but are arguing over the extent of the rate cut. Bernanke provided little clarity. More, from the Journal:

Comments Monday by San Francisco Fed President Janet Yellen and Fed Governor Frederic Mishkin seemed to make the case for a half-point reduction, Fed watchers said. In contrast, remarks by Atlanta Fed President Dennis Lockhart and Dallas Fed President Richard Fisher seemed to lean toward a quarter percentage point cut, analysts said. Wall Street was thus looking to Mr. Bernanke to break the tie, which he didn't do. Mr. Bernanke's speech is the last scheduled by a Fed official before the Sept. 18 FOMC meeting, meaning investors are likely to confront that meeting with much more uncertainty than they're used to having.

Bernanke Speech Offers No Rate Clues [Wall Street Journal]

Some punk analyst (No really, some Punk Ziegel & Co. analyst) is accusing the Fed of forcing the major banks to borrow from the discount window. Market analyst Richard Bove thinks Bernanke sweetly serenaded JPMorgan, Bank of America, Wachovia and Citi to a tune of "Come to my window / Borrow cash, even though you don't need to / Come to my window / I'll cut rates soon." From MSN:

The discount rate, though lower than it was last week, is still higher than the 5.25 percent federal funds rate, which is what banks pay to borrow from one another. Plus, because of the $38 billion in cash the Fed has pumped into the system, banks are charging only 4.9 percent for overnight loans, Bove said. A statement from three of the banks that borrowed from the discount window said they wanted to "demonstrate the potential value of the Fed's credit facility and encourage other banks to use it."

The whole thing was a "P.R. gig," like getting knocked up by David Crosby. The banks took the dough to remove the stigma on borrowing money from the Fed as a credit line of last resort (and of getting inseminated by a drugged out musician), and to encourage smaller banks to do the same.

Ahead of the Bell: Federal Reserve [AP via MSN Money]

Some quick and mixed reactions to todays Fed Statement. “The Fed eliminated a reference to a moderation in the housing market’s downturn and was vague enough on its future intentions to convince the assembled parties on trading floors and at computer desks that all was still ok, and if it wasn’t, the Fed would come in for the big rescue, or something like that,” Market Beat’s David Gaffen wrote under taunting headline “Stagflation Rules! Buy Stocks!”

“The Fed's statement was as close to sarcasm as you might ever expect to hear from that august body,” Barry Ritholz said.

"Quiet Carney. I'm trying to pretend I know John Mack's assistant," Bess Levin told us.

We’re hardly going to pretend we have some deeper insight into the meaning of today’s Fed statement than the equity markets or the bond markets. (Or that we can tell whether the various movements of stocks and bonds following the release mean equities and bonds agree or disagree on the statement.) So we’re going to ask the smartest people we know—you—in the best way we know how—a reader poll.

The Federal Reserve is meeting for the last time this year today. A statement is expected a quarter past two this afternoon. So we thought we'd take a quick reader poll in advance of the statement on the question of what the Fed will do.

Has there been a news story about JP Morgan CEO Jamie Dimon in the last year that hasn’t mentioned his famous falling out with his mentor Sanford Weill? Dimon gets the CEO slot, and it’s all about getting fired by Weill. Dimon is “expected” to get the chairman of the board seat? Yep, more about Sandy. Now the members are voting him onto the board of directors at the the Federal Reserve, and sure enough it’s mostly about the famous break-up.

How is Dimon ever expected to move on if everyone keeps bringing up his ex?

Jamie Dimon may end up succeeding Sanford Weill after all -- at the New York Federal Reserve.

Eight years after Weill fired Dimon, his heir-apparent at Citigroup Inc., Dimon is slated to replace his former mentor as a director at the Fed's New York branch. Dimon, 50, is now chief executive officer of rival JPMorgan Chase & Co. Weill, 73, retired in April as chairman of Citigroup, the biggest U.S. bank. His term as a Fed director ends Dec. 31.

The Fed's members began casting their votes yesterday for Dimon and PepsiCo Inc. CEO Indra Nooyi, who's seeking reelection. Citigroup and JPMorgan, the third-biggest U.S. lender by assets, are members of the New York Fed, which helps supervise the industry and set monetary policy.

Dimon worked alongside Weill for 16 years, beginning as his assistant at American Express Co. The two native New Yorkers shared a knack for making profitable acquisitions and slashing expenses. Their working relationship ended when Weill ousted Dimon following a series of personal and policy disputes.

JPMorgan's Jamie Dimon Nominated to Replace Weill at NY Fed [Bloomberg]

Ben Bernanke's speech to the Washington Economic Club put through the Gizoogle treatment.

In com'n decades, many forces will shape our economy n our society, but in all likelihood no single factor will have as pervasive an effect as tha aging of our populizzles In 2008, as tha first poser of tha baby-boom generizzles reach tha minimum age fo` receiv'n Social Security benefits, there wizzle be `bout five work'n-age thugz (between tha ages of twenty n sixty-four) in tha United States fo` each person aged sixty-five n drug deala n those sixty-five n cracka wizzle makes up `bout 12 percent of tha U.S. populizzles Those statistics is set ta change rapidly, at least relative ta tha speed wit which one thinks of demogrizzles changes as usually weed-smokin' place.

For example, perpetratin' ta tha intermediate projections of tha Social Security Trustees, by 2030--by W-H-to-tha-izzich time most of tha baby playa will have retired--the ratio of those of work'n age ta those sixty-five n cracka wiznill hizzy fallen fizzle fizzle ta `bout three. By that time, olda Americans wizzy constitute `bout 19 percent of tha U.S. populizzles a greata share thiznan of tha populizzle of Florida today motha fucka.
This bustin' demogrizzles transition is tha result both of tha reduction in fertility tizzle followed tha post-World War II baby bizzy n of mobbin' increazes in life expectancy.

Although crazy ass nigga expect U.S. fertility rates ta remain close ta current levels fo` tha foreseeable future, life expectancy is projected ta continue ris'n. As a conseqizzles tha anticipated increaze in tha share of tha populizzle aged sixty-five or olda is not simply tha result of tha retirizzles of tha baby gangsta tha "pig in a python" image often used ta describe tha effects of thiznat generizzles on U.S. demogrizzles is straight trippin' Instead, over tha N-to-tha-izzext few decades tha U.S. populizzles is expected ta become progressively killa n remain so, even as tha baby-boom generizzles passes frizzom tha scene.

As you may know, populizzles aging is also cruisin' in mizzle otha countries. Indeed, many of these countries is brotha along than tha United States in this process n have already begun ta experience mizzle F-U-Double-Lizzy some of its social n economic implications.

Even a brotha of tha dismal science like me would find it difficult ta describe increas'n life expectancy as bad news with the S-N-double-O-P. Longa, pimp lives wizzle provide many benefits fo` individuals, families, n society as a whole. Playa an aging populizzles also creates some important economic challenges. For example, many observa have noted tha difficult choices that aging will create fo` fiscal policy killa in tha years ta come, n I will briefly note some of those budgetary issues today. But tha implications of demogrizzles change can also be viewed fizzle a pusha economic perspectizzle As I wizzill discuss, tha broada perspective shows clearly thiznat adequate preparizzles fo` tha blunt-rollin' demogrizzle transition may wizzell involve signifizzle adjustments in our patterns of consumption, wizzork effort, n mobbin' Ultimatizzles tha extent of these adjustments depends on how we drug deala explicitly or implicitly--to distribute tha economic burdens of tha aging of our populizzles across generizzles Inherent in tizzy choice is questions of intergenerizzles equity n economic efficiency, questions that is difficult ta answa definitively but is neverthizzles among tha mizzy critical that we face as a nation.

Actually we have no idea what year Fed chief Ben Bernanke wrote his “Hippie Dictionary.” But we’re glad he did. It’s actually quite good, and nicely post-modern with its inter-textual self-referentiality. Here are the excerpts reprinted by Bloomberg.

Bird -- a lady as in ``cute chick'' or ``henpecked''
Dig -- to like, to enjoy, as ``The hippie undertaker digs his work.''
Down trip -- a drag
Drag -- a down trip
Hang-up -- a neurosis or fetish
In gear -- the cat's pajamas
Lie-In -- a form of peaceful protest that often fails when demonstrators go to sleep
Square -- someone who stays home New Year's Eve to hear Guy Lombardo play ``Auld Lang Syne''
Straight -- as in ``stiff'' (see ``dig'')
Swing -- what someone does who thinks Guy Lombardo is a football coach (see square)
Trip -- a rocket flight without the rocket

Bernanke's Hippie Dictionary Updated: Caroline Baum [Bloomberg]

[Note: Apparently, Bernanke's dictionary was originally published in connection with a school play. The Dillon Herald published excerpts from the dictionary in honor of Ben Bernanke Day, and we picked it up from a Bloomberg story we came across while reading Eddy Elfenbein's Crossing Wall Street.]

When we were in college, a competing student paper ran into trouble paying its bills. Our paper, which was notorious for its outlandishly reactionary viewpoint, offered to financially bail out the other if it would modify its editorial policy in certain ways, including supporting a ban on fractional reserve banking and the abolition of the Federal Reserve. These fond memories were brought back this afternoon when we read Peter Cohan's item speculating that the Fed may be playing politics with interest rates.

Many polls indicate that the Republican party is unpopular and that Democrats are therefore likely to make gains in November. How do interest rates figure into the election in November? With consumer credit card borrowing at near record levels of $2.2 trillion in June and 26.8% of mortgages in adjustable rates, each time the Fed raises rates, it puts the squeeze on millions of voters who are already paying close to $3 a gallon to drive to work.

So if the Fed raises rates, it turns up the anger boil against the party in power. If the Fed can hold off raising rates until after the election, it will take away a bit of potential pain from voters who might be making up their mind about whether to keep incumbents in power. Meanwhile, the 7% increase in labor costs translates into more money in the pockets of these potential voters.

We’re decidedly ignorant when it comes to people who have job titles like “Senator.” That may or not be a good thing. Maybe knowing something about those types would help us understand the world better. But the cost of paying attention and seeing through the spin seems enormous. So our ignorance is probably pretty rational.

So we can’t help the Big Picture. But maybe you can. Here’s today’s inquiry.

Its easy to point fingers, but let's get to the heart of the matter -- how much of the present inflation is due to ultra low rates? Huge deficits? Unfunded tax cuts?

Phrased differently, who is more responsible for the present inflationary run up -- Bernanke or Bunning's Congressional Colleagues?

This afternoon on Bloomberg's financial news cable station Stephen Roach, aka Wall Street's worst economist, asked, "Will the real Ben Bernanke please stand up?" The Morgan Stanley economist then added that the Fed chairman has a "credibility issue."

Over on Crossing Wall Street, Eddy Elfenbein explores the deeper meaning of Roach's comments.

This raises two important questions.

1. What the fuck?

2. No, seriously...what the fuck?

Every now and then it's helpful to break-up the now standard "pause" or "rate increase" talk about the Federal Reserve's next step with a reminder that the Fed is not a force of nature--like say hurricanes--but something invented sometime near the start of the last century. The folks who write for LewRockwell.Com like to call Washington, D.C. "Mordor" so it's no surprise they regard the Fed as the equivalent of the ring that caused Frodo and Samwise so much trouble.

The Federal Reserve was forged by Senators Sauron and Aldrich in 1913 to "bring them all, and in the darkness bind them." OK, actually it was created by a group of evil banking wizards on a 1910 duck hunting trip, as all "regulatory agencies" are always summoned into existence by the criminal elements of the industries that they "regulate." The Fed does, however, function in much the same manner as the One Ring.

Paul Kedrosky is fed up with listening to people parse the latest statement from the Fed. So he has designed a tool to generate random Fed statements. Everytime you click on Ben Bernanke's face it loads another absurd statement.

Instant Ben: A Fed Press Release Generator [Infectious Greed]

Fed bossman Ben Bernanke's speech yesterday prompted a rash of good business journalism headline writing yesterday, much of it annoyingly better than our attempt. We liked the Street.Com's "Bernanke Impresses" for the subtle way it reminds us how unimpressive Bernanke's earlier performances have been. And Forbes' "Bernanke's Gin Rummy Game" is just weird enough to make us grin.

But the top honor goes to the Wall Street Journal for "Bernanke Speaks, Nobody Dies"

How much fun it must be to be Fed honcho Ben Bernanke these days! Coming in with a reputation of being somewhat soft on inflation, he then confused the markets by making alternating dovish and hawkish noises in several speeches and his famous dinner table aside to CNBC’s Maria Bartiromo.

For the past couple of weeks, however, both Bernanke and the rest of the Fed members seem to be engaged in a campaign to asset their tough-on-inflation credentials. The markets have mostly bought the act, with most analysts expecting one or two more interest rate hikes.

Then today he gives a speech that seems to warn that the real danger is “inflation expectations” rather than honest-to-goodness, too-many-dollars inflation. What’s more, he seems to buy into the notion that the increase in core inflation is mostly due to spill-over effects from increases in energy prices. The Wall Street Journal went so far as to give the story on the headline “Bernanke Highlights Inflation Risks, But Sounds Somewhat Dovish Note.”

Which is to say, the Benanke dance continues! Fun!

Bernanke Says High Oil Prices May Slow Growth, Spur Inflation [Bloomberg]

Like the Soviet Union after Stalin, it seems that trying to figure out what is going on at the Fed after the Greenspan era is like predicting a game of chess among masters. Only this time, we're the pawns. Or maybe the economy is the chess board. Or, oh, never mind.

Gerard Baker reports:

... from what I hear, it was not only startled bond traders who were murmuring profanities about the world's most powerful central banker. It seems that some of his own colleagues within the Fed were somewhat upset by the way the chairman appeared to pre-empt an evolving debate at the central bank about the next move in interest rates...

[More from Baker on the Fed after the jump]

James Grant is one of our favorite commenters, and it's not just because we have a soft spot for contrarians. Today the Wall Street Journal asked Grant whether Bernanke has credibility. Grant's answer: Of course not; he works for the Fed, doesn't he?

If the U.S. Department of Agriculture announced, "The price of corn will henceforth be $4 a bushel, and we will meet every six to eight weeks to reconsider, but trust us on this," there would be no end of indignation. People would protest this impudence on the part of bureaucrats.

We call Fed policy makers "central bankers," which is so much more dignified than "bureaucrats." But it is the same proposition. The Fed says it will fix the price of money at a level that will maximize employment and minimize the rate of the rise in prices -- except not too little; we want it to be about 2% -- and make the stock market go up at a nice rate and keep the banking system intact. How can it be credible?

If people think more closely about what the Fed purports to do and exercise skepticism about the capacity of everyday human beings, I think they wouldn't be hanging so heavily on Mr. Bernanke's every word and wondering whether he has credibility. He's in an incredible line of work.

Everyone's hating on poor Ben Bernanke these days. Kudlow says Bernanke's lost the plot.

His admission to Senator Jim Bunning of a “lapse of judgment” in the Bartiromo kerfuffle is pure process—not content. His “data-driven” approach to policy is backward looking driving through the rear view mirror.

Bernanke should go back to his confirmation hearing statement, when he stated that price stability is the cornerstone of economic growth. This should be his main message. He should resurrect his numerical inflation target. And he should publicly say that enhanced dollar value is vital to price stability.

Meanwhile, the Austrians have regathered and are taking time to display their ire.

The problem today is simple to state but difficult to solve: The derivatives market is huge. It is far beyond the ability of any or all central banks to solve, once cascading cross defaults spread to the international bank payment system. The modern division of labor, which keeps billions of people alive, has a sword of Damocles above it: the threat of fractional reserve banking’s gridlock in a wave of defaults. This is the ultimate fire sale.

The combination of moral hazard, fractional reserve banking, faith in central banking, and speculators’ desire to make a bundle of money from highly leveraged futures contracts has created a time bomb condition.

Bernanke, following Milton Friedman, thinks that a government-licensed monopoly, the Federal Reserve System, can overcome cascading cross defaults. He has bet your life on this.

Off Message [Kudlow's Money Politics]

Bernanke’s Bet on Derivatives [LewRockwell.com]