Bye Bye Bernanke (I)

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On Jan­u­ary 31, we will bid good­bye to chair­man Ben Bernanke and say hel­lo to chair­man Janet Yellen. Most com­men­tary has focused on what Yellen’s ascen­dan­cy might mean for the Fed­er­al Reserve and the US econ­o­my, but today I’d like to con­sid­er how Bernanke’s lega­cy might he be regard­ed in future years — say, 70 years after the cri­sis we’re in now.

It cer­tain­ly won’t be as he expect­ed it to be before he took on the job of Fed chair­man in Feb­ru­ary 2006. In the worst case sce­nario, he will be blamed for caus­ing the ‘Great Reces­sion’, just as he blamed his pre­de­ces­sors for caus­ing the Great Depres­sion.

His fin­ger-point­ing doesn’t get any more bla­tant than his clos­ing remarks in his speech in praise of Mil­ton Fried­man at the lat­ter’s 90th birth­day gabfest back in 2002:

Let me end my talk by abus­ing slight­ly my sta­tus as an offi­cial rep­re­sen­ta­tive of the Fed­er­al Reserve. I would like to say to Mil­ton and Anna: Regard­ing the Great Depres­sion. You’re right, we did it. We’re very sor­ry. But thanks to you, we won’t do it again.”

Of course, Bernanke got the job he’ll soon vacate because he was per­ceived as the Her­cule Poirot of eco­nom­ics, whose bril­liant sleuthing solved the ‘Who­dun­nit?’ of the Great Depres­sion. But a clos­er look (both at his sleuthing and his per­for­mance in office) reveals him to have been more of an Inspec­tor Clouse­au, whose suc­cess­es, as Wikipedia notes, emanat­ed from “fre­quent­ly pur­su­ing an idi­ot­ic the­o­ry and solv­ing the case only by sheer, improb­a­ble luck”.

That of course is unfair, but then so too was Bernanke’s treat­ment of his pre­de­ces­sors.

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About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.