The tragedy of being Ben Bernanke..

Brad Delong reviews the book by big Ben and is puzzled what went wrong:

It is difficult to read former US Federal Reserve Chair Ben Bernanke’s new memoir, The Courage to Act, as anything other than a tragedy. It is the story of a man who may have been the best-prepared person in the world for the job he was given, but who soon found himself outmatched by its challenges, quickly falling behind the curve and never quite managing to catch up.

It is to Bernanke’s great credit that the shock of 2007-2008 did not trigger another Great Depression. But his response to its aftermath was unexpectedly disappointing. In 2000, Bernanke had argued that a central bank with sufficient will could “always,” in the medium term at least, restore full prosperity via quantitative easing. If a central bank printed money and bought financial assets on a large-enough scale, people would begin to step up their spending. Even if people believed that only a fraction of quantitative easing was permanent, and even if the incentive to spend was low, the central bank could restart the economy.

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In the end however, Bernanke did not deliver. Even though the Fed and many other central banks printed much more money than economists would have thought necessary to offset the impact of the financial crisis, full prosperity has yet to be restored. Bernanke increased the US monetary base five-fold, from $800 billion to $4 trillion. But it wasn’t enough. And then, his courage failing, he balked at taking the next leap: more than doubling the monetary base to $9 trillion. In his last years in office, Bernanke was reduced to begging in vain for Congress to institute fiscal expansion.

So what went wrong?

Read the article for the answer (no easy one as always in economics)..

In the end, he suffered the same fate as most masters of money end up suffering..

One Response to “The tragedy of being Ben Bernanke..”

  1. MS Says:

    Thanks Amol. Guess you inadvertently included an advertisement/request in the Peoject Syndicate quote

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