The Washington Post Profiles Ben Bernanke

A thoughtful piece in the Washington Post on Ben Bernanke is extremely
laudatory about his new approach at the Fed.

I still worry that in the end that the government will have spent trillions too much to fight a recession and that economic growth will suffer for decades. There is a real principal-agent problem at work here. If the government does nothing and we have a huge depression, Bernanke and Obama get blamed. If the government does nothing and we don’t have a depression, they don’t get much credit.

If the government spends trillions and we still have a huge depression, people will say, “Think how bad things would have been if they hadn’t spent those trillions.” If they spend trillions and we don’t have a depression, people give them credit for averting the depression.

So even if the trillions do nothing, the government still has a strong incentive to appear to be doing something, even if the cost is high. And we will probably never learn whether the trillions were well spent, so we won’t know any better the next time around.


Johnathan Vrozos

The Government and The Fed (which is not owned by the Government, read the book The Island of Jekyll and Hyde)) have 2 different agendas. The Government needs tax revenues to survive and therefore keeps putting money out as "loans" to the country. The Fed supplies that money to the Government and has the Country's Government. They both win. The people will lose due to inflation created by the mass dollars on the street.

R. Singhania

Why do people forget that doing nothing 'consciously' is also 'taking a view' ?

A lot of waste of time, money and resources could be avoided if we could keep this small tenet in mind.

To consciously 'do nothing' requires a strong belief in what you stand for and immense self-control/ maturity. In this case it requires unwavering faith in the power of 'free markets'.

Lee Woodmansee

I think you forget the large number of people who will say, after we don't have a depression, that it would have been better and we would not be so much in debt if the Government had not spent so much money.

The point being that people will blame or excuse the spending based upon what they believed before the Government started spending. The result of the spending has no bearing on how people excuse or blame the Obama administration.

Sean

We are way over maubama's 8% emergent unemployment figure now with an undereported, underestimated 9.7% and b/w ~12-31% in CA alone. what is being done for this crisis? All these smoke-mirror distractions such as health "care" and foreign "matters", mexican flu on the dramatic rise instead of border closings by an incompetent drug company biased CDC, etc...are all joke smoke screens--what is being done to help real, legal, Americans find gainful, legitimate employment?

instead we have the secretary of "state" doing the boogie-woogie in africa--is that the change we can believe in--a change in employment status while being terry nickell dimed by the usa employers?!