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.