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April 07, 2013 11:00 AM QOTD: Brad DeLong on Ben Bernanke: worst Fed Chair since the Great Depression?

By Kathleen Geier

Brad DeLong on Friday’s dismal jobs report:

Twenty years from now, young whippersnapper economic historians will come to interview me.
They will ask: “Why don’t you think Ben Bernanke was the worst Fed Chair since the Great Depression—worse even than the hapless G. William Miller—because of his failure to understand even one of (a) the implications of the pre-2008 growth of leverage, derivatives, and shadow banking; that his job in the summer and fall of 2008 was not to curb moral hazard but to prevent depression; (c) the goals of his dual mandate; the structure of the economy he was managing; and (e) how to mark his beliefs to market when the economy did not evolve as he had predicted?”
What answer am I going to be able to give?
What was Barack Obama thinking? What was Tim Geithner thinking? What was Ben Bernanke thinking?
What is Barack Obama thinking? What is Jack Lew thinking? What is Ben Bernanke thinking?

What, indeed?

Kathleen Geier is a writer and public policy researcher who lives in Chicago. She blogs at Inequality Matters. Find her on Twitter: @Kathy_Gee

Comments

  • Anonymous on April 07, 2013 11:16 AM:

    To borrow a catch phrase, simple answers to simple questions: Barack Obama is joined at the hip to big money interests and doesn't care a whit about ordinary folks like myself.

  • Milt on April 07, 2013 11:40 AM:

    20 years from now no one is going to know the name Brad DeLong so you really don't need to worry about it.

  • Davis X. Machina on April 07, 2013 11:50 AM:

    It's just like 9/11. 9/11 made all sorts of people, unexpected people sometimes, stupid and crazy, in all sorts of different ways.

    The prospect of a complete collapse of the banking system, U6 at 50% and U3 at 25%, in a country with just about as many guns as people, made people, unexpected people sometimes, stupid and crazy, in all sorts of different ways.

    As Alan Dershowitz with civil rights and torture, so Ben Bernanke with macroecomics and fiscal policy.

    The difference being Dershowtiz wasn't AG.

  • biggerbox on April 07, 2013 11:52 AM:

    Perhaps by then, someone will have figured out where items (b) and (d) in DeLong's list went.

  • BloggerPlease on April 07, 2013 11:52 AM:

    This is more than a little ridiculous. Bernanke is a disappointment, but have we forgotten his immediate predecessor?

  • c u n d gulag on April 07, 2013 12:05 PM:

    'What is they thinkin'?'

    Well, I suppose what they is thinkin,' is that to be considered "serious" by the "Very Serious People" who determine what goes into their "very serious" history books, what all of the "Very Serious People" is thinkin' about:
    What to do about the minor national debt problem, and how to make the people with the most money and power, and the most to do with the problem(s), suffer the least - and make the ones with the least to do with the problem(s), and the least amount of money and power, suffer the most.

    That'll get Obama, and the rest of the gang, into the "Very Serious People's" "very serious" history books, where future "Very Serious People" will acknowledge that they handled the countries "serious" problems, in a most "serious" way.

    Otherwise, if they don't, Obama and the rest of the gang will be relegated to the rack of history books by not-very-serious Liberals, like Howard Zinn.

    And we can't have that, now can we?

  • Gandalf on April 07, 2013 12:22 PM:

    Boy the bench in't very deep here at political animal.

  • Rick B on April 07, 2013 12:33 PM:

    Bernanke replaced the utterly ignorant libertarian goldbug - appointed initially by the senile Ronald Reagan - Alan Greenspan. When blame is objectively assigned for the Great Recession and it's extremely weak recovery the first two factors to be blamed are going to be Greenspan and the Austerians worldwide.

    Then Bernanke is going to have to step up for blame after that. But he at least was appointed because he understood the causes of the Great Depression better than almost anyone else, and after Greenspan and Bush were through with the economy there was almost certainly no possible way out of the financial collapse. Bernanke was a hail Mary pass by the Bushites to try to delay the financial disaster into the administration that followed good old G. W.

    Bernanke, however, was neither a banker nor a politician. Those were skills he has had to learn on the fly.

    I wonder what Brad DeLong would have done differently from what Bernanke has done? Bernanke was confirmed for a second term as Chairman in January 2010. I wonder if DeLong could have been either confirmed initially in 2006 or reconfirmed in 2010?

  • Keith M Ellis on April 07, 2013 2:31 PM:

    To add to BloggerPlease's and Rick B's excellent comments, that Bernanke, of all people, can be criticized in these terms says far, far more about the ideology and politics of the Fed board and governors, and that inside the Beltway, than it says about Bernanke.

    Bernanke is about as far from Greenspan as is possible and, more to the point, is a widely accepted expert on the Depression who repeatedly has argued for the positions that he's now being criticized for the Fed not taking.

    He's a natural experiment which proves just how big is the chasm between academic economics and the culture of the Fed. It's the Borg and he was assimilated, just as the Very Serious Borg in Washington is slowly assimilating Ezra Klein.

    This criticism of Bernanke is strikingly similar to much of the criticism of Obama. I won't argue that both couldn't have done and do better, because I think they could have and should. But we in the US have almost magical thinking about leaders and their supposed powers to dictate change. The left, center, and right all blame Obama, with different arguments concerning different goals, for not waving his hand and making things as they ought to be. This is striking given that we all have some amount of sociopolitical indoctrination that power is deliberately diffused in the US.

    These criticisms of Bernanke are really criticisms of the Fed and, in that, they're entirely valid. If you follow discussions in the Fed, you'll find that Bernanke is to the left of the majority of the governors — there's a tiny number who are arguably left of him. But there's a much larger number who are very far to the right. And the Fed culture itself is inherently conservative in the banker sense of "conservative". They instinctively want to do as little as possible.

    Expecting the Fed to have been what we needed it to be, or even to have been more in line with Bernanke's positions before he became Chair, is, sadly, unrealistic.

  • exlibra on April 07, 2013 2:52 PM:

    Better late than never, but Bernanke has started pumping money into economy (Quantitative Easing I) a while back, and is sticking to it (Q.E. II), despite the calls for a stop, now that the economy is showing some small signs of recovery. He's made 6.5% unemployment his benchmark, much to the chagrin of many, who'd rather see 15% or higher for both short-term financial (lots of desperate people willing to work for almost nothing) and political (good club to beat Obama with) reasons.

    One might wonder what Brad DeLong had been thinking, and just how good his way with numbers is, if he can't make a list of 5 points without losing two on the way (good catch, biggerbox, @11:52AM).

    Brad DeLong never got over Hillary Clinton losing the nomination in '08, and Larry Summers' less-than-stellar showing while in the administration. It's likely that nothing Obama does is going to please him. Even Krugman -- so often critical of Bernanke (and also a strong early backer of Hillary Clinton) -- has never made such sweeping and facile condemnations of Bernanke (or Obama) and, as far as I'm concerned, I'd take Krugman's assessment over DeLong's any day.

  • smartalek on April 07, 2013 7:45 PM:

    Exlibra, no disrespect intended, but biggerbox did not make a good catch, but rather misconstrued what went missing in DeLong's work as copied here.
    No points got either lost or left out; there *are* 5 points there in the list.
    What's missing -- and all that's missing -- are the "(b)" and the "(d)."
    See those semi-colons?
    Those are where the missing parentheses+letters got left out or deleted at some point.
    The relevant part of the sentence, with the parenned letters reapplied and bolded, should be:

    "... his failure to understand even one of (a) the implications of the pre-2008 growth of leverage, derivatives, and shadow banking; (b) that his job in the summer and fall of 2008 was not to curb moral hazard but to prevent depression; (c) the goals of his dual mandate; (d) the structure of the economy he was managing; and (e) how to mark his beliefs to market when the economy did not evolve as he had predicted?"

  • paul on April 08, 2013 9:14 AM:

    Ooh, G. William Miller. Firm handshake, stern eyes, no use whatsoever. I think Bernanke's problem is that he's confronted by challenges that can't be met by the methods fed chairmen have typically used. Volcker's crush-and-and-strangle certainly wouldn't have worked. And Greenspan was incredibly lucky that promising bankers unlimited credit happened to be an effective antidote to panic. Bernanke has had to break new ground, and hasn't done it well.

    (This is unlike, say, GWB, who earned the "Worst President" award almost entirely on his own initiative.)