ATLANTA – Recognizing parallels between ancient history and our time is one of the pleasures I take from having studied Classics in college. And it pays off, too: While telling my daughter the story of the Odyssey recently, I realized it may be a fitting metaphor for the journey about to be taken by Ben Bernanke, President Bush's nominee for chairman of the Federal Reserve. Bernanke studied economics at Harvard and M.I.T., which is a good foundation for a central banker. But if he had had time to take a Greek class, he might have learned some other important lessons…
Sing to me of the man, Muse, the man of twists and turns
Driven time and again off course, once he had plundered
The hallowed heights of Troy.
– The Odyssey by Homer
So begins the marvelous story of Odysseus, the farmer and warrior from Ithaca who became a hero during the Trojan War. It focuses on his ten-year journey home – one so famous that any long and twisted journey is now known by his name.
Let's imagine the Muse sings again, but this time about our modern-day Odysseus, Ben Bernanke. His journey home begins in Troy where Agamemnon (also known as Alan Greenspan) has led the Greeks (us U.S. citizens in this version) for 18 years in a war against the forces of inflation, recession and slow economic growth.
A.G.'s success has elevated him to kingly status. He used the Trojan horse to trick and utterly defeat the Trojans. What was hiding in the giant wooden horse's belly? Not Greek warriors this time, but the easy money the Fed has provided since the recession in 2000.
However, just as the Greeks came out at night to defeat the Trojans from within their city walls, that over-abundance of money and credit may still demand a ruinous payback for our nation. The lesson to learn: Beware of Greeks bearing gifts of easy money.
Now we turn to what fate holds for our Ben-Odysseus as he sets sail from Troy to return home. He departs with 12 ships and many of us as his crew to traverse the stormy, wine-dark seas. In the original story, Odysseus loses all his crew and ships on the way home. But because Ben-Odysseus has much experience with monetary policy and economic data, we trust in our hero's skill to save us.
Meanwhile, his patient wife, Penelope (the pure and strong U.S. economy), waits for him at home, weaving the cloth whose stitches she pulls out at night to fend off the suitors – all the financial derivatives traders and hedge fund managers and mortgage finance officers – who have tried to steal her good name and carry her away.
The Muse tells us that, first, Ben-Odysseus is thrown off course and sails far from Greece to the land of the Lotus Eaters. There he saves his crew members from eating the honey-sweet lotus that makes us forget about our worries of not saving enough money for the coming economic storms. "I brought them back to the hollow ships," he says, "so none could eat the lotus, and forget the voyage home."
Then he reaches the wooded island of the Cyclops. This one-eyed monster resembles our national debt, which eats many of Ben-Odysseus's crew before he pokes out the Cyclops eye, and the rest of us escape.
Next, he sails to the Isle of Winds, and asks the king of that island to harness all but the west wind so that we can sail home. This wind in our sails is provided by China and other nations who buy our debt, so that we can continue to buy more of their products. But one day, we are buffeted by all the winds again when these same nations decide to diversify their holdings by taking in more euros and gold and fewer U.S. dollars, stranding us far away from home.
In time, Ben-Odysseus sets sail again and comes to the island where the enchantress Circe lives. She tells him that he must travel to the Land of the Dead, also known as the Land of the Fed Heads. There he crosses the river alone to speak with the prophet Tiresias (the still-very-alive former Fed chairman Paul Volcker), who instructs him on how to deal with stagflation, that curious time when low wages and a stagnating economy are made worse by rising prices.
When he returns from the Land of the Dead, Circe explains how to protect us from the dangers still to come. It is when we approach another island and begin to hear the sweet song of the Sirens that Ben-Odysseus plugs our ears with beeswax and tells us to lash him to the mast so that he can hear the song but not be lost. He says that their song filled him with wonder: "They sang to me, 'Ben, oh Ben, keep your crew happy by keeping the economy liquid. Keep pouring more money into the economy, and all will be well…'"
And then comes the most difficult test of all, as we sail our ships between the two cliffs where the monster Scylla (deflation) lurks on one side and the dangerous whirlpool named Charybdis (inflation) swirls menacingly on the other. No one has ever sailed between these two before without being harmed. Even the true Odysseus was not immune. He decided to sail closer to Scylla, and the six-headed monster ate more of his crew. Does deflation do the same to us? Since Ben-Odysseus has studied what caused the Great Depression, perhaps he has learned better how to slay Scylla with a mighty monetary policy blow.
In the old story, Odysseus finally makes his way home to Ithaca, where he kills the suitors and lives a peaceful life with his Penelope. I suggest that we pray to Athena and the other gods of growth and prosperity to let our modern-day Odysseus finish his journey on the same happy note, with a strong and resilient economy waiting to welcome home our weary hero.
Susan C. Walker writes for Elliott Wave International, a market forecasting and technical analysis company. She has been an associate editor with Inc. magazine, a newspaper writer and editor, an investor relations executive and a speechwriter for the Federal Reserve Bank of Atlanta. She received her B.A. in Classics from Stanford University.