It Looks Like Everyone Owes Bernanke A Big Apology … Since the day the rally began in early 2009, basically they've always been wrong. The economy since the bottom has been characterized by steady, underwhelming improvement, and the only time the market has dived has been during periods when it looked like the economy might falter (most notably right after the 2011 debt ceiling brouhaha) … So if the aforementioned crowd is the loser, then the winner is Bernanke. – Business Insider
Dominant Social Theme: Central banking works, and Bernanke works best.
Free-Market Analysis: This is a revealing editorial in Business Insider because it shows more clearly than most what the deeper issues are surrounding Bernanke – and the worldwide discussion regarding his strategies and preferences.
The discussion is really about the efficiency of central banking itself. It's not a question of getting the policy right but of advertising the triumph of a particular central banker who, more than many, has staked his reputation on the idea of central banking as an academic as well as professional discipline.
This is in line with the technocratic elements of modern monetary management. Ben Bernanke and now the Bank of England's Mark Carney are supposed to be examples of the modern money technologist, people who combine public relations savvy with vast analytic skills that allow them to make wise decisions on behalf of all who participate in commerce and trade.
What this article seeks to establish is that Bernanke has been misunderstood, and that his policies, much maligned, have worked well. Here's more:
At every turn, he's been slammed by hawks of various feathers. In 2011 it was the inflation hawks who mocked him for saying that inflation was "transitory" and that the Fed needed to stay the course with easy policy. He was right. Inflation was transitory.
Lately it's been the deflation hawks, talking about how Bernanke is making a wild mistake, hinting at a QE taper roadmap, and yet, risk assets like stocks have gotten through this period fine, and despite fears of disinflation there are signs of wage strength, signaling that once again, price weakness is likely to be "transitory."
The economy is far from perfect. Unemployment is still too high. And a good argument could be made that the Fed ought to have been far more aggressive this entire time, starting in 2008. But the U.S. stands out around the world for having the strongest of the major economies (arguably the strongest economy period, as emerging markets crumble) and those who fret the loudest about inflation or deflation have generally been proven wrong. Bernanke wins again.
This defense of Bernanke strikes us as wrong-headed on a number of fronts. First of all, inflation is monetary; price inflation is a secondary phenomenon. While the article states that inflation is transitory, this only reveals a misunderstanding of what inflation is. There is plenty of money trapped in the system that will begin to circulate over time – trillions, actually. To write that inflation is transitory is to ignore the money that has already been printed.
Does the US really have "one of the strongest economies" in the world? Just the other day, we reported on government-released statistics that indicated tens of millions of US citizens who want jobs are out of work. Many jobs in the US are now either gray- or black-market – or if they are formally acknowledged are temporary ones.
The US is generally acknowledged to be in an ongoing Great Recession. So why the spirited defense of central banking and Ben Bernanke? Because, we would propose, central banking is a fundamental dominant theme of those globalists that use their control of money printing to bankroll a huge number of other internationalist strategies. Central banking is to be defended at all costs.
And so it will be. Whether it is the careful positioning of Mark Carney as the first movie-star central banker or the careful repositioning of the Bank for International Settlements as a more "transparent" and therefore more valid institution, we can see the powers-that-be making great efforts to ensure that central banking is seen as valuable and necessary.
Of course, the main problem with central banking is that it is not forward looking. No group of good, gray men, no matter how handsome, affable and scientific, can ever figure out how much money an economy will need in the future. Only the Invisible Hand of competition utilizing marketplace money – subject to competitive forces – can do that.
That's why these sorts of articles in defense of central banking are so deeply dishonest. Those writing them are often business journalists who would insist that they are pro-competition and believe in the capitalist system of marketplace innovation.
Just not for money.