Go ahead and turn off that Bernanke testimony. It's irrelevant ...

All eyes (okay, some eyes; certainly not mine) have been on Ben Bernanke as he testified about monetary policy yesterday in the House and today in the Senate. In an interesting little essay in the latest Economist's Voice, though, veteran Chicagoan Lester Telser argues that the Fed's monetary decisions get far more attention than their limited impact warrants.

Business reporters and Fed watchers continue to focus on monetary policy, but that is no longer, if it ever was, the Fed's main job.

The Fed's main job today is to respond to crises, like the stock market crash in October 1987, the collapse of Long Term Capital Management in September 1998, and the terrorist attack on September 11, 2001 .... When crises threaten the financial system, the Fed puts out the flames. The record shows that Alan Greenspan's Fed did learn the lesson taught by the Great Depression. Let us hope that Ben Bernanke's Fed continues on this road.