Ben Bernanke, Chairman of the US Federal Reserve bank has been a busy fellow lately. He and his buddy Secretary of the Treasury, Hammering Hank Paulson, have been engaged in alligator feeding of the highest order. So far the big bad alligator has consumed several hundred billions of the US taxpayers money (actually most of it borrowed from the Chinese) with no end in sight.

The alligators, of course, are the commercial banks, investment banks, and Wall Street brokerage firms who after creating the biggest financial mess in America's history ran to the government for bailout funds.

Bear Stearns was the firm that for the moment, at least, brought the financial crisis to a head. Wall Street's fifth largest investment bank made bets at about forty to one leverage that the toxic junk subprime mortgage loans that it was packaging and marketing to investors the world over were actually AAA quality paper.

As the real estate market tanked and the mortgage loans made to people who had little ability to repay begin to really stink Bear Stearns began to have liquidity problems. Bear had actually been stupid enough to keep billions of dollars of these questionable assets on its own books.

When you are leveraged at 40 to 1 it only takes a 2.5% reduction in total market value of the assets under management to wipe out your entire equity base. There is not much room for error as Bear Stearns found out.

As word leaked out Bear about its liquidity problems experienced a run on the bank and JP Morgan and the Fed stepped in with a big assist from Hank Paulson. It was feed the alligator time as the Fed ponied up 29 billion dollars to grease the way for the JP Morgan buyout at an original price of $2.00 a share. Bear Stearns had sold on the NYSE for over $150 a share the previous year.

Helicopter Ben has been a very active Fed chairman. You have to give the guy credit for trying to head off a US recession, or do you? Bernanke has opened up the Fed overnight loan window to the investment banks and brokerage firms. He has been very aggressive in lowering the federal funds and discount rates. But is it wise to try and prevent the natural weeding out and corrective process that are part of a capitalistic financial system?

As an academic Bernanke is a student of the Great Depression and thinks that cutting rates and flooding the markets with liquidity is something that the Fed should have done in the 1930's. He is determined to avoid the mistakes that he thinks were committed by the Fed in the 1930's. The sad fact is that he is feeding the alligators the same menu that largely caused the financial meltdown in the first place.

The current financial mess was caused in large measure by Alan "Bubbles" Greenspan and the artificially low interest rates that were the hallmark of his time at the Fed. It is not logical that providing the financial markets more of what brought on their illness in the first place is going to provide a miracle cure. The probability is that Bernanke and the Fed's actions to date are going to make things far worse.

The cost of trying to prevent a natural recession that comes along every few years in a capitalist financial system will likely be more than if you had let the recession occur. It will probably occur anyhow, to the complete dismay and I expect consternation of the chief alligator feeder, one Ben Bernanke.

At the rate that Bernanke is creating money out of thin air and spending money that the largest debtor nation in the history of the world, the US government, doesn't really have, we may well be on the road to hyperinflation at the same time that real estate values and the value of the dollar are still on a downward path.

In trying to feed the alligators the risks to the US economy of a long and protracted recession, perhaps something worse, are high. Those of you over fifty or so probably remember the word stagflation. Stagflation, a high inflation rate with no or negative growth in the economy, is the worse of all economic worlds.

Ben Bernanke and Alan Greenspan have a good chance of going down in the history books as the men who destroyed the US economy. Feeding hungry alligators is a dangerous business.