Ben Bernanke issued a death sentence on the PBGC yesterday

If Fed Chairman Ben Bernanke was trying to accelerate the collapse of public and private pension systems, it looks like he succeeded yesterday.

The Federal Reserve's 'Operation Twist' to bring down bond yields and stimulate the economy is likely to cause pain for the nation's largest pension funds, already struggling with funding shortfalls from the recent stock market decline.

Hit both by falling stock prices and falling bond yields, the 100 largest pension plans of public U.S. companies have assets covering only 79 percent of their liabilities as of the end of August, down from 86 percent at the end of 2010, according to consulting firm Milliman Inc...

...[Twist] could drive down the yields on AA-rated corporate bonds and related benchmarks used by the pension funds to calculate their liabilities.

Most private U.S. defined benefit plans, which oversee about $2 trillion, are hurt when long-term yields decline because of the way the plans must value future payouts they will make to retirees in coming decades.

Let me be the first to predict that Ben Bernanke just signed the death sentence on the Pension Benefit Guaranty Corporation (PBGC). What's that you say? It's yet another masterpiece of central planning, which happens to be bankrupt. Just like Social Security, Medicare, the FDIC, the Federal Highway Trust Fund, and everything else the Statists touch.

All of this means that taxpayers -- your kids and grandkids included -- will be on the hook for yet another of the Obama Democrats' epic failures.

How's "Helicopter Ben's" Anti-Deflation Checklist Working Out?

In 2002, Ben Bernanke -- the nation's foremost expert on the Great Depression -- gave the infamous "helicopter drop" speech in which he described how America could avoid deflation.

As Chairman of the Federal Reserve, Bernanke has had more than enough time to try each and every policy prescription. How's he doing?

Here is Bernanke’s roadmap, and a “point-by-point” list from that speech.

1. Reduce nominal interest rate to zero. Check. That didn’t work...

2. Increase the number of dollars in circulation, or credibly threaten to do so. Check. That didn’t work...

3. Expand the scale of asset purchases or, possibly, expand the menu of assets it buys. Check & check. That didn’t work...

4. Make low-interest-rate loans to banks. Check. That didn’t work...

5. Cooperate with fiscal authorities to inject more money. Check. That didn’t work...

6. Lower rates further out along the Treasury term structure. Check. That didn’t work...

7. Commit to holding the overnight rate at zero for some specified period. Check. That didn’t work...

8. Begin announcing explicit ceilings for yields on longer-maturity Treasury debt (bonds maturing within the next two years); enforce interest-rate ceilings by committing to make unlimited purchases of securities at prices consistent with the targeted yields. Check, and check. That didn’t work...

9. If that proves insufficient, cap yields of Treasury securities at still longer maturities, say three to six years. Check (they’re buying out to 7 years right now.) That didn’t work...

10. Use its existing authority to operate in the markets for agency debt. Check (in fact, they “own” the agency debt market!) That didn’t work...

11. Influence yields on privately issued securities. (Note: the Fed used to be restricted in doing that, but not anymore.) Check. That didn’t work...

12. Offer fixed-term loans to banks at low or zero interest, with a wide range of private assets deemed eligible as collateral (…Well, I’m still waiting for them to accept bellybutton lint & Beanie Babies, but I’m sure my patience will be rewarded. Besides their “mark-to-maturity” offers will be more than enticing!) Anyway… Check. That didn’t work...

13. Buy foreign government debt (and although Ben didn’t specifically mention it, let’s not forget those dollar swaps with foreign nations.) Check. That didn’t work...

The Fed can certainly encourage inflation by offering money at seemingly attractive rates, but it cannot force the issue.

Right now, neither consumers nor businesses want the risk. They are too loaded up with debt already, no matter how attractive the Fed wants debt to appear. It's like trying to give a kid one piece of cake too many. At some point, extra frosting makes the cake look less attractive, not more. At that point the kid will not take another bite.

That is the point we are at now.

"Mr. Wizard, get me the hell out of here!"