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A "Heroic" Ben Bernanke Blames Congress For Poor Economic Recovery

Make no mistake, Ben Bernanke is a “courageous” guy. 

When the world was on the verge of collapse in 2008 thanks in no small part to the post dot-com bubble policies of his predecessor, the former Fed chair wants you to know that he did what was needed to save the world and he will tell you all about it in his new memoir “The Courage To Act”, which can be yours on Kindle for the weird price point of just $16.05 (or, in unconventional monetary policy terms, about a QE millisecond).

Of course perhaps more than any other post-crisis DM central banker, Bernanke has a lot of explaining to do. That is, it isn't immediately clear why, if Ben wants to contend that the Keynesian dominoe effect he set off in 2008 is such a success, that inflation expectations are still mired in the deflationary doldrums in Japan and Europe and why global demand and trade are stuck at stall speed.

Of course what you do if you're a Keynesian central planner in today's low-growth world is blame lawmakers because after all, when monetary policy fails to bring about the promised defibrillator shock to global demand, you can always pin the whole debacle on an ineffective legislature. Here's FT with Bernanke's take:

The former chairman of the Federal Reserve has hit out at Congress for failing to do its part to bolster America’s rebound from the financial crisis, saying the US central bank had been unfairly criticised when the recovery “failed to lift all boats”.

 

In his newly published memoir, Ben Bernanke admitted the Fed had failed to spot some of the dangers building before the financial crash, and said that the controversial rescues of Bear Stearns and the insurance company AIG had damaged its political standing and “created new risks to its independence”.

 

As suggested by the title of his book, The Courage to Act, Mr Bernanke argues that the Fed’s policies under his leadership were justified and helped usher in a stronger recovery than in many other countries. He draws a sharp contrast with the euro area, where monetary and fiscal policies had been “much tighter than demanded by economic conditions,” helping explain the miserable recovery in that economic bloc.

 


 

Mr Bernanke levels frequent criticism at Congress in the book, calling for less confrontation and implicitly contrasting the bitter partisanship on Capitol Hill with a collegiate, consensus-building approach within the Fed.

 

The publication come as Congress struggles to reach agreement on budget plans that would ensure highway building is funded and avoid a punishing fiscal clampdown after temporary spending measures lapse in December.

 

Mr Bernanke writes: “The Fed can support overall job growth during an economic recovery, but it has no power to address the quality of education, the pace of technological innovation, and other factors that determine if the jobs being created are good jobs with high wages.

 

“That’s why I often said that monetary policy was not a panacea — we needed Congress to do its part. After the crisis calmed, that help was not forthcoming. When the recovery predictably failed to lift all boats, the Fed often, I believe unfairly, took the criticism.”

Fortunately for Bernanke's successors at the Fed, there are now plenty of loud calls for monetary policy and fiscal policy to be merged which means that no longer will "heroes" like Ben have to worry about recalcitrant lawmakers, they'll simply be able to order the issuance of bonds which they themselves will purchase, and as absurd as you might think that sounds, it's where things are headed because as we outlined last month, it now looks like "they" are actually going to go "there" with the helicopter money drops. It's just too bad Ben isn't around to preside over the insanity.