It's not easy to take a complex subject and make it easy to understand (not to mention entertaining), but I think Einhorn's pulled it off here. And the fact that he brings The Simpsons into it just makes it all that more appealing to me. I'm easy.
I'll excerpt a couple of sections of it here (basically the beginning and the end), but I seriously suggest that you take a few minutes and read the whole thing. At the very least, it'll help you understand just why the economy can't seem to get out of its own way.
A Jelly Donut is a yummy mid-afternoon energy boost.
Two Jelly Donuts are an indulgent breakfast.
Three Jelly Donuts may induce a tummy ache.
Six Jelly Donuts -- that's an eating disorder.
Twelve Jelly Donuts is fraternity pledge hazing.
My point is that you can have too much of a good thing and overdoses are destructive. Chairman Bernanke is presently force-feeding us what seems like the 36th Jelly Donut of easy money and wondering why it isn't giving us energy or making us feel better. Instead of a robust recovery, the economy continues to be sluggish. Last year, when asked why his measures weren't working, he suggested it was "bad luck."
I don't think luck has anything to do with it. The blame lies in his misunderstanding of human nature. The textbooks presume that easier money will always result in a stronger economy, but that's a bad assumption...
I think we've reached the point where even Homer can see that the last thing he needs is another Jelly Donut, but the Fed Chairman is oblivious.
We can all say "D'oh!"Since I left out the entire guts of the argument, you'll have to go to the full article to see what he's saying. I like the analogy, and I definitely agree with Einhorn's conclusions. The Fed needs to get out of the way, allow the market's price mechanism to work properly (even if that means significant short-term pain), and let the economy begin to heal itself. Doing otherwise will only prolong the pain, and could even create the next crisis--I might in fact argue that it already has.