- Joined
- Nov 5, 2010
- Messages
- 39,958
Bob Murphy: http://consultingbyrpm.com/blog/2014/01/the-bernanke-legacy.html
The WSJ recently ran an interesting assessment of Bernanke’s legacy, as he chairs his final FOMC meeting this week. It opens with this provocative paragraph:
The WSJ piece points out something I hadn’t realized: “As Fed transcripts show, Mr. Bernanke was the board’s intellectual leader in its decision to cut the fed-funds rate to 1% in June 2003 and keep it there for a year.” Elsewhere I have made the case that this extraordinarily low interest rate policy helped fuel the housing bubble, but I never knew Bernanke had been instrumental in pushing it through.
Time will tell–perhaps sooner than many of us realize–just how much mischief Bernanke has, in turn, bequeathed to his own successor. But when reflecting back on his legacy, let us not forget the following string of systematic failures to understand just how bad things were unraveling before the crisis struck in 2008:
https://www.youtube.com/watch?v=9QpD64GUoXw
The WSJ recently ran an interesting assessment of Bernanke’s legacy, as he chairs his final FOMC meeting this week. It opens with this provocative paragraph:
As the Federal Reserve Chairman prepared to step down, the encomiums rolled in. “The most successful tenure in Fed history,” said the S&P economist. Added a former Fed Governor: “He has been called, and I think justifiably so, the greatest central banker in history.” He was the man who saved the world, a genius, the maestro.
The trick here–as perhaps the term “maestro” gave away–is that these accolades accrued to Alan Greenspan upon his descent from power. When he handed over the keys to the printing press in 2006, it was not yet obvious to everyone just how much damage Greenspan’s easy-money policies had baked into the cake.
The WSJ piece points out something I hadn’t realized: “As Fed transcripts show, Mr. Bernanke was the board’s intellectual leader in its decision to cut the fed-funds rate to 1% in June 2003 and keep it there for a year.” Elsewhere I have made the case that this extraordinarily low interest rate policy helped fuel the housing bubble, but I never knew Bernanke had been instrumental in pushing it through.
Time will tell–perhaps sooner than many of us realize–just how much mischief Bernanke has, in turn, bequeathed to his own successor. But when reflecting back on his legacy, let us not forget the following string of systematic failures to understand just how bad things were unraveling before the crisis struck in 2008:
https://www.youtube.com/watch?v=9QpD64GUoXw
