But he did say, when asked directly during a debate last September, that he would not reappoint Bernanke as chairman of the Fed. As Romney clunkily explained it back then, Bernanke’s monetary stimulus “has over-inflated the amount of currency that he’s created” and “did not get Americans back to work.”

With those words in mind, how should we interpret a report from the Wall Street Journal indicating that, as far as Romney’s top economic advisor, Glenn Hubbard, is concerned, “if there’s a hero in this story, it’s the Fed and Chairman [Ben] Bernanke.”

The “story” being the great narrative of financial crisis, recession and recovery. Hubbard is someone whom we should probably take seriously on the topic of Bernanke. Both men served as chair of Bush’s Council of Economic Advisors. Presumably, Hubbard is one of the people whose opinion on whether to reappoint Bernanke or pick someone else would be important. (Hubbard is also a prime candidate for the job himself.) But if Hubbard is publicly labeling Bernanke a hero, why wouldn’t Romney reappoint him?

Hubbard’s comments provoked some unkind tweets from financial journalists about Romney’s new Etch-a-Sketch drawing of Bernanke. And not without merit. The truth is, the real reason Romney turned against Bernanke had nothing to do with his policies. Bernanke is much more vulnerable to criticism from the left for not doing enough to address unemployment than he is from the right for stoking nonexistent inflation. As recently as January 2010, Romney was complimenting Bernanke on the great job he was doing.

But the GOP base hates Bernanke. The Tea Party sees him as an unelected tyrant, busily bailing out the banks while creating oodles of “fiat” currency that will ultimately destroy the nation. The audience at a CNN debate in which Michele Bachmann was asked if she supported Rick Perry’s accusation of treasonous behavior cheered wildly at the mere raising of the topic. During the primary campaign, Romney tailored his Federal Reserve policy points to appeal to the crowd that sees central banking as just one step to the right of the antichrist.

But that’s all over now. As of Tuesday night, Romney has officially acquired sufficient delegates to clinch the Republican nomination for president. He no longer is under any requirement to pander to the Republican base and is now free to act like the moderate Republican that he’s always been.

And make no mistake, if there’s one thing that Romney will dedicate himself to as president, it will be keeping Wall Street and investors in financial markets happy. That will mean continuing, without change, to support a Federal Reserve that is eager and willing to flood the monetary system with cheap cash every time it looks like the stock market is about to crash. Bernanke is the perfect guy for that, or, failing that, someone who can be depended on to do exactly what Bernanke would do.

Just to put things in perspective,  the Fed “committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.” That’s also more than 10 times the size of TARP — the bailout administered by the U.S. Treasury. It’s no wonder that a long line of banking spokespeople and financial institution CEOs refused to comment to Bloomberg for the story. What’s left to say?

The report is must reading for followers of the emerging history of the financial crisis for obvious reasons. But tracking the reaction to the revelations from some liberal commentators to the news has been intriguing. Paul Krugman, Matthew Yglesias (newly ensconced at Slate), Mother Jones’ Kevin Drum and Mike Konczak at Rortybomb are all singing the same tune: The problem, they say, is not that the Federal Reserve moved heaven and earth to shovel trillions of dollars at the banking industry — that, in fact, is exactly what you want the central bank to do in the middle of a banking panic. That’s how Great Depressions are prevented.

The outrage, they all agree, is that the same determination and all-in blitzkrieg wasn’t aimed at unemployment and the foreclosure mess and the myriad woes affecting the rest of America. The 1 percent got a gift-wrapped bonanza, while the 99 percent got the shaft. As soon as the financial panic subsided and stock prices started to rise, policymakers started worrying far more about inflation and deficits than actual human suffering. And that’s unacceptable.

I personally have no argument with that basic thesis. We can definitely question the exact tactics employed, and speculate, as do the above-mentioned commentators, on whether Obama would be better off, politically, if a harder line had been taken against the banks, in return for saving their bacon. But I too am glad that, bottom line, the Fed stabilized the financial sector. The 99 percent would have an even harder time finding jobs if the six biggest banks had gone bankrupt.

But I find myself wondering how this nuanced interpretation intersects with the anti-Wall Street animus that bubbles in the hearts of both Tea Partyers and Occupy Wall Street protesters. For fully understandable reasons, there’s a sizable contingent of Americans who would take pleasure in the sight of Bank of America, Citigroup, Goldman Sachs and JPMorgan Chase crashing and burning. At the conservative end, there are many who believe that nobody should get bailed out, period. On the liberal end, there’s a sense that government aid to the banking sector has aided and abetted growing income inequality. At the voter level, there’s very little appetite, at any point on the spectrum, for a “well, some actions, even if we don’t like them, are necessary for the greater good.”

Politically speaking, such a dynamic spells trouble for Obama in the year ahead. His Republican opponents will surely use the Bloomberg report to tap popular anger and slam the Fed. Everyone, on this platform, is a wannabe Occupy Wall Streeter. Whoever ends up as the Republican presidential nominee will be under no obligation to explain that sometimes the medicine doesn’t taste very good. Meanwhile, Obama faces the unhappy prospect of defending the nasty medicine that kept Wall Street afloat while simultaneously explaining why his administration hasn’t been able to engineer a similar rescue effort for Main Street.

The statement released by the Federal Open Market Committee was the most downbeat of the entire year to date. After months of telling us that the slowdown was caused by temporary factors that would ameliorate before the end of the year, the Fed was forced to acknowledge that there are “significant downside risks to the economic outlook.”

So the Fed took action, and while the steps it unveiled were more aggressive than most people expected, and certainly constituted a rebuke to GOP congressional leaders who were telling it not to do anything, the strategy isn’t going to be enough to make a significant difference. That’s a downer: When you acknowledge seriously deteriorating conditions but take insufficient action to address them, you inject more fear into the markets.

So what exactly did the Fed do? What is Operation Twist?

There are two key elements.

First, the Fed announced that, over the next nine months, it would sell $400 billion worth of short-term government securities and buy $400 billion worth of long-term government securities. This doesn’t change the overall Fed balance sheet, so it can’t be caricatured as “printing money.” But what it does do is change the average length of duration of the securities that the Fed is holding.

And that, in turn, means that there will be fewer long-term securities available on the open market for other investors to buy. Scarcity will increase demand, and in consequence, the yields on those bonds — the interest rates that the U.S. government has to offer to attract buyers — will fall. This will effectively lower borrowing costs throughout the entire country. And theoretically, that should stimulate economic activity.

Second, the Fed announced that it would reinvest the cash from expiring mortgage-backed securities into new mortgage-backed securities. This represents a reversal of the Fed’s previous strategy, which was to allow its huge portfolio of mortgage-backed securities to gradually shrink. The result of this reversal should be downward pressure on mortgage interest rates, which would, again theoretically, result in an upsurge in refinancing and a boost to the housing market.

Economists generally agree that these moves will have some impact. The problem is that they just don’t expect it to be very large. Borrowing costs are already very low, but gunshy banks just aren’t willing to make loans, no matter how cheap the cost of capital. The main problem afflicting the U.S. economy is a massive shortfall of demand, and tinkering at the margins with interest rates isn’t going to change much. As Paul Krugman pithily put it, the Fed’s action is like “using a water pistol to stop a charging rhino.”

However, the fact that the Fed felt compelled to make these moves, even after receiving a letter from the Republican congressional leadership demanding that it take no “extraordinary interventions” in the economy, and in the context of Republican presidential candidates declaring that such intervention is “treason,” is all the proof we need that the U.S. economy is in trouble.

What the Fed announced yesterday is hardly “treason,” by any sane interpretation. One could even argue that it doesn’t measure up to the level of “extraordinary.”

But it’s also not enough to cure what ails us, and that’s why markets are plummeting.

They didn’t threaten to “treat him pretty ugly” — as Texas Governor Rick Perry told his supporters last month he’d deal with Bernanke if he “printed more money” between now and the election.

But the threat was there. “It is not clear that the recent round of quantitative easing undertaken by the Federal Reserve has facilitated economic growth or reduced the unemployment rate.”

Translated: You try this, and we rake you over the coals publicly, and make the Fed into an even bigger scapegoat than we’ve already made it.

Top Republicans believe they can block all or most of Obama’s jobs bill. That leaves only the Fed as the last potential player to boost the economy. So the GOP will do what it can to stop the Fed.

After all, as Republican Senate head Mitch McConnell stated, their “number one” goal is to get Obama out of the White House. And that’s more likely to happen if the economy sucks on Election Day.

To say it’s unusual for a political party to try to influence the Fed is an understatement.

When I was Secretary of Labor in the Clinton Administration, it was considered a serious breach of etiquette — not to say potentially economically disastrous — even to comment publicly about the Fed. Everyone understood how important it is to shield the nation’s central bank from politics.

If global investors suspect the Fed is responding to political pressure of any kind, investors will lose confidence in the independence of the Fed and its monetary policies. Even if the pressure is to tighten the money supply and keep interest rates high, it’s still politics. And once politics intrudes, lenders of all stripes worry that it will continue to intrude in all sorts of ways. Lending to the United States becomes a tad riskier. As a result, lenders charge us more.

The Republican letter puts Bernanke and his colleagues in a bind. If they decide against another round of so-called “quantitative easing” to lower long-term rates and boost the economy, they may look like they’re caving to congressional Republicans. If they decide to go ahead notwithstanding, they’re bucking the Republicans and siding with Democrats. Either way, they’re open to the charge they’re playing politics.

Congressional Republicans evidently don’t care. They want Obama out, whatever the cost. Besides, they’ve never met a government institution they don’t mind trashing.

Responding in part to the turmoil that disrupted financial markets after Standard & Poor’s decision to downgrade U.S. credit, and in part to the increasing evidence that the economy was slowing faster than previously predicted, the Fed announced that it was committed to keeping interest rates at “exceptionally low levels… at least through mid-2013.”

Three members of the committee dissented from the decision. In a somewhat cryptic postscript, the official press release noted that “Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser… would have preferred to continue to describe economic conditions as likely to warrant exceptionally low levels for the federal funds rate for an extended period.” (Emphasis mine.)

The difference between “an extended period” and “at least through mid-2013″ might seem a picayune matter to most people. But it’s been 19 years since as many as three members of the Open Market Committee have dissented at the same time. In Fed terms, that’s at least a mild earthquake. Within the confines of this slender semiotic gap we can see new evidence of a major split between the Fed’s “hawks” and “doves,” as well as irrefutable proof of a crucial failure by the Obama administration to exert its influence on economic policy.

In Fed parlance, hawks are worried that low interest rates will lead to excessive inflation. Doves believe that inflation isn’t currently a threat, and taking measures to stimulate the economy and spur job creation should be a higher priority. By advocating for the term “extended period” instead of for a longer  commitment, the dissenters were implicitly arguing that the Fed should be keeping inflation fears on the front burner, as well as sending a signal that any more ambitious, unconventional form of monetary easing should be strictly avoided.

Fisher, Kocherlakota and Plosser are all well-established as hawks — and some are stout critics of any government intervention in the economy (in 2008 Kocherlakota signed a petition opposing Obama’s stimulus). But that’s not the only thing that they have in common — all three are also presidents of regional Federal Reserve banks. And that’s an important fact to keep in mind when conducting amateur Kremlinology on how the Committee makes decisions.

Normally, the Committee is made up of 12 members. Seven are “governors” appointed by the president of the United States to 14-year terms. Five are presidents of the Fed’s 12 member banks, rotated into the Committee for one-year terms. But the bank presidents are carefully “insulated” from the political process. The directors of each bank choose their own bank president, and six out of nine of those directors are in turn chosen by the banks who make up the Federal Reserve system.

What does that mean? It means at least five of 12 FOMC members owe their allegiance primarily to the banking sector. The fact that three out of those five are currently the most hawkish members of the Committee is not an accident. Banks hate inflation.

But here’s where this story really goes off the rails. Two of the seats allotted to the Board of Governors are currently empty. Even worse, there are no outstanding nominations for those seats. This constitutes criminal negligence on the part of the Obama White House.

It’s not all Obama’s fault. He has already appointed three governors — Janet Yellen, Sarah Raskin, and Daniel Tarrullo (and he also reappointed Bernanke.) So his stamp is on four of the 10 curent members. And of course, one of his other nominees, the Nobel-prize winning economist Peter Diamond, ran into the same stone wall of opposition from Senate Republicans that has thwarted so many other Obama nominations and initiatives.

But if Bernanke’s cautious leadership derives in part because, as economist Justin Wolfers writes, he has only the support of a “slim governing coalition,” the fact that there are two vacancies on the Committee that should already be occupied by Obama nominees has got to be a major reason why. As Matthew Yglesias moaned earlier this month, “if it’s not possible to work something out, then there ought to be a partisan fight.”

Just letting the power to appoint people to the most important economic policymaking institution in the country languish isn’t an acceptable outcome. The single largest influence on President Obamas re-election prospects is the short-term performance of the economy, and the single largest influence on the short-term performance of the economy is the Fed.

This should be a campaign issue. Republican intransigence is preventing the President of the United States from appointing Federal Reserve members empowered to fulfill one crucial part of the Fed’s dual mandate — full employment. If Bernanke isn’t willing to be aggressive, one reason why is that he just doesn’t have the troops.

I’ve read and watched more Bernanke speeches than I care to remember over the past five years, and I can’t think of one that contained less content or meaningful analysis — aside from a few jabs at legislators for the debt ceiling negotiation fiasco. Not only did Bernanke decline to announce any new initiatives to address the fact that unemployment is still over 9 percent, — and, according to the latest GDP revision, economic growth for the first half of the year grew  a pathetic .7 percent, he didn’t even specify in any detail what the Fed could do if it was so willing. Instead, he pronounced himself “optimistic” as to the long-term growth potential of the U.S. economy.

“It may take some time,” said Bernanke, “but we can reasonably expect to see a return to growth rates and employment levels consistent with those underlying fundamentals.”

In the meantime, we’ll do zip. Not my problem, was the message, loud and clear. I wonder if President Obama is finally regretting his decision to reappoint Ben Bernanke to a second term as Federal Reserve chairman.

The only section of the speech that contained an interesting nugget came in an oblique reference to whether government should be doing anything to spur employment in the short term.

“Normally,” said Bernanke, “monetary or fiscal policies aimed primarily at promoting a faster pace of economic recovery in the near term would not be expected to significantly affect the longer-term performance of the economy. However, current circumstances may be an exception to that standard view…”

Bernanke went on to argue that since the “extraordinary high level of long-term unemployment” could be expected to harm the long-term prospects of the economy, boosting jobs now could help later.

Under these unusual circumstances, policies that promote a stronger recovery in the near term may serve longer-term objectives as well. In the short term, putting people back to work reduces the hardships inflicted by difficult economic times and helps ensure that our economy is producing at its full potential rather than leaving productive resources fallow. In the longer term, minimizing the duration of unemployment supports a healthy economy by avoiding some of the erosion of skills and loss of attachment to the labor force that is often associated with long-term unemployment.

Well, yes. So what are you going to do about it, Mr. Chairman?

The answer, today, was nothing.