Ouch: The Nobel Prize in Economics for former Fed Chairman Ben Bernanke is perhaps one of the worst reputations of all time.
Our problem isn’t Bernanke’s actions during the 2008 financial crisis, or even his stupidity in paving the way for the mortgage crisis. It’s his 2010 relaunch of ‘Quantitative Easing’ (with enthusiastic support from his then No. 2 and eventual successor, Janet Yellen – now Treasury Secretary).
You can absolutely defend the Fed’s repeal of rules in 2008, but not the return to “money printing” two years later simply because the economy wasn’t recovering as fast as Bernanke wanted.
Spending explosions, tax hikes, and regulatory actions during the Obama era were the real drags on private sector growth, and Bernanke’s easy-money policies couldn’t change that. They barely boosted employment — but created long-lasting bubbles in asset prices that boosted Wall Street while Main Street was in the doldrums.
Worse, the Fed kept it up under Yellen, and when Jerome Powell took over in 2019 and began scaling back trillions in QE, the financial system began to freeze again – forcing the Fed to pull out.
Then came the COVID lockdowns and trillions more in emergency QE. Now the Fed is trying again as consumer inflation surges. But that necessary action threatens to weaken the US economy (Biden’s return to Obama policy isn’t helping), and a panic in bond markets like the UK has just witnessed could yet tie the Fed’s hands and leave it helpless to inflation.
Even attributing miracles to Bernanke in 2008, his subsequent exploits stumped the nation for decades.