LAST week Ben Bernanke appeared before Congress, setting off a discussion over whether the president should reappoint him as chairman of the Federal Reserve when his term ends next January. Mr. Bernanke deserves to be reappointed. Both the conventional and unconventional decisions made by this scholar of the Great Depression prevented the Great Recession of 2008-2009 from turning into the Great Depression 2.0.
Mr. Bernanke understands that in the Great Depression, the collapse of the money supply and the lack of monetary stimulus during contractions worsened the country’s economic free fall. This lesson has paid off. Mr. Bernanke’s decision to keep interest rates low and encourage lending has, for now, averted the L-shaped near depression that seemed highly likely after the financial collapse last fall.
Say what?
First this week's testimony by Bernanke did not set off a discussion about his his reappointment. It been going on for months. See here and here.
Roubini then writes:
Mr. Bernanke understands that in the Great Depression, the collapse of the money supply and the lack of monetary stimulus during contractions worsened the country’s economic free fall. This lesson has paid off.
As things got worse in early 2008, Bernanke collapsed money growth that summer. See here, here, here, here, here, here, here and here. This is what intensified the downside in September 2008.
And Bernanke is doing the same thing this summer. See here.
Most bizarre, Roubini writes:
Mr. Bernanke’s decision to keep interest rates low and encourage lending has, for now, averted the L-shaped near depression that seemed highly likely after the financial collapse last fall.Yet, just last week, Roubini stated we are likely headed down again in a double dip recession. Here's Bloomberg:
A “perfect storm” of fiscal deficits, rising bond yields, “soaring” oil prices, weak profits and a stagnant labor market could “blow the recovering world economy back into a double-dip recession,” he wrote in a research note today. “It is getting more likely unless a clear exit strategy from the massive monetary and fiscal stimulus is outlined even before it is implemented.”
Roubini is a shill. Plain and simple.
ReplyDeleteJustin_n_IL
Hey Ben, let Nouriel rub your shoulders just before Larry puts a knife between them. Or maybe Roubini's just slapping on a KICK ME sign.
ReplyDeleteThis administration is out for blood, and it will be interesting who pulls out the knives first. Right now they're just twisting arms and knocking heads. Don't let the facade fool you.