Bernanke Ponders The Plunge
By: Brady Willett
Monday, 25 June 2012
Three months ago Ben Bernanke gave a series of lectures and defended the Fed’s actions during the financial crisis. In what was tantamount to a post-crisis victory lap, Bernanke contended that “we did stop the meltdown”, and “we avoided what would have been, I think, a collapse of the global financial system.” These sentiments echoed similar self-congratulatory remarks made by Mr. Bernanke in 2011 and 2010. For that matter, they mirrored those made by Bernanke as far back as August 2009:
“History is full of examples in which the policy responses to financial crises have been slow and inadequate, often resulting ultimately in greater economic damage and increased fiscal costs. In this episode, by contrast, policymakers in the United States and around the globe responded with speed and force to arrest a rapidly deteriorating and dangerous situation…As severe as the economic impact has been, however, the outcome could have been decidedly worse. Unlike in the 1930s…” August 21, 2009. Bernanke
And yes, whenever Bernanke mentions the ‘1930s’ it is time to simply add yada, yada, yada…
But I Thought The Crisis Was Over?
Last week Bernanke announced a continuation of the Fed’s maturity extension program (or ‘operation twist’) and stressed that the Fed was ready to do more. Nearly 5-years since the Fed’s first rate cut – and with the Fed unable to exit any major stimulus scheme – the committee is getting ready to launch QE3?